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The UK’s largest listed landlord Segro has announced a joint venture with Oaktree-owned Pure Data Centres to develop a £1bn fully fitted data facility, after describing the potential for returns in this market as “too large to ignore”.
Segro is best known as an owner of specialist logistics properties and has for many years leased “powered shells” — buildings with sufficient electricity supply to allow them to be fitted out as data centres by customers.
The deal for its first “fully fitted” centre, based in London, means adding systems such as cooling, cabling and emergency power. Customers who lease the facility would still need to install their own servers.
Segro will provide cash investment of £150mn alongside the land for the new £1bn facility in Park Royal in west London, in a 50-50 joint venture with Pure.
Chief executive David Sleath said recently that entry into this new market “involves a lot more capital going in, but the margins are very significant . . . too large to ignore”.
The attractive returns from data centres have led commercial landlords to pour more money into the fast-expanding sector, with growth expectations fuelled by artificial intelligence.
Pure and Segro expect to pre-let the facility to a “hyperscaler”, the industry term for big cloud computing groups such as Amazon, Microsoft and Google.
Investors in the sector appear largely unfazed by new AI models such as China’s DeepSeek that require less computing capacity.
Proponents also argue that construction of these facilities is limited by the amount of electricity and suitable land, which will prevent oversupply. Centres near big cities, and therefore closer to customers, are considered less vulnerable to fluctuating AI demand, because they are also suitable for cloud computing clients.
Oaktree, the $200bn US alternative and credit investor, owns 85 per cent of London-based Pure, which has operations in Europe, Asia and parts of the Middle East.
The UK Labour government is changing planning rules to encourage data centre construction and has approved several controversial projects.
Science, Innovation and Technology secretary Peter Kyle said: “Private investment like this innovative partnership between Segro and Pure will help us ensure the UK has the digital infrastructure it needs to thrive”.