Built Environment: Should Private Equity Be Excited About Data Centres?

A booming sector with lots of opportunities, but not without its challenges.

Private equity firms have been showing strong interest in data centres lately—and it’s easy to see why. From an end-market perspective, this is a sector riding powerful tailwinds, with projections that stand out against the sluggish pace of greenfield growth elsewhere in the built environment. Installations are expected to rise by nearly 20% over the next five years.

But it’s not all smooth sailing. Developing a data centre can take years, with slow progress from planning to operation. The UK government’s recent designation of data centres as critical national infrastructure should help accelerate timelines, but challenges remain.

Energy consumption is another concern. Data centres use vast amounts of power, raising questions around sustainability and possibly the impact on household energy bills.

Still, opportunities extend beyond new construction. The UK already has 477 active data centres, each requiring services such as energy efficiency consultancy, facilities management, and innovative cooling solutions. These services are often delivered by specialist firms with deep expertise—creating a competitive moat that’s rare in other built environment sectors. For private equity, this means a market that’s not only growing but also offers defensible niches.

Overall, data centres represent an exciting opportunity for investors. But it’s a space where risks and uneven growth patterns need careful consideration.

For more information, please contact:

Matt McNally

mmcnally@armstrong-ts.com
+44 7894 736 523