Real estate

Data centers:

Empowering a data-driven world.

Surging demand. High barriers to entry. It’s time to look at data centers.

1:02 minView video transcript

Find out why data centers are increasingly attractive to institutional investors:  Get our perspective (PDF)

At-a-glance—The data center opportunity

Digital transformation and increasing global demand for data have brought the sector to the center stage.

Accelerating demand

Structural shift in how consumers and corporations use data powered by Internet of Things (IoT), Infrastructure as a Service (IaaS), e-commerce, and gaming.

Limited supply

Data center vacancy rate is at its lowest point ever in the U.S. Rising land prices, longer lead-times for power and equipment, and increased labor costs all are driving up construction costs; Hyperscale users are competing for key locations.

Volume of data generated vs. storage capacity

Storage capacity
Data created or replicated
Bar graph displaying volume of data generated vs. storage capacity from 2010 to 2025 (projected)

Source: IDC 2022.

Compelling investment opportunity

Low correlations to other assets, a favorable risk/return profile, and new liquidity from institutional capital make data centers a portfolio component worth considering.

High barriers to entry

Given the highly specialised and niche nature of the data center industry, experience is critical to successful execution—development, leasing, technical expertise, ESG, etc.

Market size and vacancy rate

Commissioned power
Under construction
Vacancy
Inverse relationship graph showing data center market size increasing and vacancy rate decreasing from 2015 to 2023

Source: datacenterHawk, 4Q 2023.

Build your perspective

Thought capital & latest insights

Learn more about the many aspects driving data center demand and opportunities.

Our capabilities

  • Experience: We have been investing in the sector since 2006 and have built strong relationships with key partners over this time period.

  • Varied strategies: Our strategies range from build-and-lease to core as well as value-add acquisitions of existing data centers. We offer development on a ready-to-fit or turnkey basis.

  • Knowledge: As the asset class evolves and adapts, our investment approach focuses on understanding where the most compelling opportunities exist.

  • Sustainability: With our long-term experience in responsible property investing, we understand the unique development, operational, maintenance, security, and energy requirements specific to data centers.

  • Exposure: With investment teams in both the U.S. and Europe, we have a well-rounded view of the market and share our in-depth local market knowledge across the teams.

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Disclosure

Past performance does not guarantee future results. Asset allocation and diversification do not ensure a profit or protect against a loss.

Real estate investment options are subject to risks associated with credit, liquidity, interest rate fluctuation, adverse general and local economic conditions, and decreases in real estate values and occupancy rates.

Principal Real Estate is a trade name of Principal Real Estate Investors, LLC, an affiliate of Principal Global Investors.

MM12913-02 | 10/2024 | 3976620-042025