Logistics real estate firm ESR has made a significant move in the data center industry with its recent acquisition of land in Sydney, Australia. The company has purchased two sites at Horsley Park and Erskine Park, which were initially earmarked for a Digital Realty data center. This strategic acquisition signifies ESR’s expansion into the data center sector and its plans to build a robust data center ecosystem across the Asia-Pacific (APAC) region.
Details of the land acquisition
ESR, through its subsidiary Logos, acquired the sites for a total of AU$210.4 million (US$137.14 million). The Horsley Park site, also known as SYD16, was purchased for AU$114.4 million (US$74.57 million), while the Erskine Park site, referred to as SYD15, was acquired for AU$96 million (US$62.57 million). These acquisitions highlight ESR’s commitment to expanding its presence in the data center market in Sydney.
Background information on Digital Realty’s previous ownership claims
Digital Realty, a prominent colocation company, had previously announced its acquisition of the Horsley Park and Erskine Park sites in 2020. At the time, Digital Realty stated that these sites could support up to 250MW of capacity. However, the recent report on ESR’s land acquisition has raised questions regarding Digital Realty’s ownership claims.
Digital Realty’s response to the report
In response to the report, Digital Realty has contested some aspects, stating that it never actually owned or leased one of the sites. Furthermore, Digital Realty refutes the claim that they have sold the other parcel. The company is focused on bolstering its balance sheet and diversifying its sources of capital, and these recent developments may signify a shift in their data center expansion plans.
Digital Realty’s current operations in Sydney
Currently, Digital Realty operates two data centers in Sydney within the Erskine Park area. The facilities, known as SYD10 and SYD11, provide critical data center services to various clients. SYD11, also known as Digital Erskine Park II, opened its doors in 2018, offering a two-story facility with 19MW of capacity spread across 176,150 sq ft (16,365 sqm). These data centers serve as a solid foundation for Digital Realty’s operations in the Sydney market.
ESR’s plans and investments in the data center sector
Supported by investors such as Warburg Pincus, ESR has set ambitious goals to build a data center ecosystem across the APAC region. This recent land acquisition in Sydney is part of the company’s strategy to establish a strong presence in crucial data center markets. ESR’s subsidiary, ARA Asset Management, is also involved in the data center industry through its Logos Group unit. Logos recently partnered with Pure Data Centres for the development of a 20MW facility in Indonesia.
ER’s Development Plans
ESR has announced its intention to develop a diversified portfolio of data centers in key cities such as Hong Kong, Osaka, Tokyo, Seoul, Sydney, Mumbai, and Singapore. The company recognizes the growing demand for data center services in these markets and aims to provide state-of-the-art facilities to meet the evolving needs of businesses.
ESR’s acquisition of the land previously earmarked for a Digital Realty data center in Sydney marks a significant milestone in the company’s foray into the data center industry. With its strategic investment and backing from investors like Warburg Pincus, ESR is well-positioned to establish a solid presence in the APAC data center market. The growth of logistics real estate firms like ESR in this sector highlights the increasing convergence between the logistics and data center industries. As data continues to play a critical role in the digital economy, these developments pave the way for exciting opportunities and advancements in the data center landscape in Sydney and beyond.