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Investors turning to data centers; Harrison Street forms $1.5B build-to-rent JV

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Investors turning to data centers; Harrison Street forms $1.5B build-to-rent JV

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

Some investors are moving capital from offices into data centers as companies rethink return-to-office plans amid the threat of the omicron variant of the coronavirus.

The value of global data center acquisitions in 2021 reached a record $47.1 billion, up from $34.5 billion in 2020 and more than three times 2019's level, Dow Jones Newswires reported, citing Synergy Research Group. Global internet traffic grew 48% in 2020 and 23% in 2021 on the back of booming e-commerce, remote working, online gaming and media streaming, the news wire added, citing the TeleGeography Global Internet Geography Research Service.

Demand is expected to rise further, despite some headwinds. These include potential oversupply in some cities and investment returns that lag gains in other real estate sectors, a possible consequence of Big Tech corporate tenants that are able to negotiate hard for the terms of their leases, according to the news outlet.

Partnerships

* Harrison Street Real Estate Capital LLC partnered with Core Spaces LLC to invest as much as $1.5 billion to buy and develop single-family build-to-rent communities across the U.S. The joint venture's current pipeline represents roughly $2.5 billion in total capital and more than 6,500 units in markets such as Austin, Texas; Denver; Dallas; Orlando, Fla.; and Nashville, Tenn.

* American Real Estate Partners and Harrison Street are allotting $1 billion through a joint venture to develop six data centers in Ashburn and Arcola, Va. The buildings will span 2.1 million square feet of data center space.

* Thomas Park Investments and Artemis Real Estate Partners LLC set up a $500 million joint venture to buy a portfolio of healthcare properties across the U.S. mid-Atlantic and Northeast. The venture has so far bought three fully leased medical office buildings in Baltimore; Columbia, Md.; and Princeton, N.J.

Property moves

* Alexandria Real Estate Equities Inc. completed the acquisition of an office park in Cambridge, Mass., from The DAVIS Companies Inc. and Principal Real Estate Investors LLC for $815 million. The Charles Park property spans 408,259 square feet and comprises two buildings and a seven-story parking garage.

* Alexandria also bought four buildings in Palo Alto, Calif., for $446 million, the Silicon Valley Business Journal reported. The properties, spanning 292,000 square feet, will be redeveloped into office and laboratory space upon expiration of the existing in-place leases.

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