Goodman expands data centre projects to target $80b in value
Industrial property global giant Goodman will look at increasing its power bank in coming years as it works with tenants to make is vast portfolio as energy efficient and on top of the technology wave as they demand.
The use of robotics and artificial intelligence is growing at a rapid rate as companies themselves try and keep up with the constant changes in technology. Goodman will focus on developing high-tech energy-efficient warehouses, most of which will be high-rise due to the scarcity of land.
Known as digital infrastructure, the industrial property juggernaut said close to 37 per cent of all its global projects currently under construction are data centres.
This is expected to be worth about $80 billion in the next five to seven years. The facilities will be located across 12 major cities. Of this $80 billion, about $50 billion will be real estate developed and owned by Goodman and its partners upon completion.
The proliferation of these bespoke climate-controlled data centres has been fuelled by growth in data-hungry applications such as e-commerce, the introduction of new technologies like 5G and the impact of COVID-19 on remote working.
It is a multibillion-dollar market and any space is being eagerly snapped up from the listed investors to private businesses and small-to-medium super funds.
To provide the power source needed to keep the large-scale sites open and operational without too much harm to the environment, Goodman has about 4 gigawatts in its “power bank” and plans to increase that by 2.1 GW soon and is in advanced talks to get another 1.8 GW.
Data centres are measured in power, rather than square metres and one gigawatt is equal to one billion watts. To put into perspective, the light bulbs in a home are typically between 60 and 100 watts.
“We have continued to make further progress in this financial year on advancing our data centre strategy – securing power and planning, commencing infrastructure and continuing to work with customers on optimal delivery models that suit their requirements,” Goodman chief executive Greg Goodman said.
“Making our sites as efficient as possible is top of mind for us and is top of mind for all our customers. Everyone’s got a program to reduce carbon emissions, and it’s all part of the process and planning as well.”
One of the latest sites to become a state-of-the-art data centres, when the development application is lodged, is on the former ABC television studios on Sydney’s North Shore.
The group bought the former headquarters at 2-8 Lanceley Place and 14 Campbell Street, Artarmon in July 2022 for $94.87 million. It had a lease to the broadcaster which ended a year ago.
For the half year to December, Goodman posted an operating profit of $1.12 billion, up 29 per cent on the previous corresponding period. It had a loss of $220.1 million which was due to one-off property valuations and non-cash items.
Goodman said with the high demand for industrial property and in particular high-yielding data centres, he upgraded the company’s full-year profit growth from 9 per cent to 11 per cent. An interim distribution of 15¢ will be paid on February 23.
Globally, Goodman has entered into agreements to deliver up to 1,000 MW of power in Japan and has started construction of a new 50 MW data centre in Tsuen Wan in Hong Kong.
Goodman’s head of Asia, Paul McGarry, said the group’s ability to secure land and power in high-demand locations in the tier 1 markets of Japan and Hong Kong has resulted in a power bank of 1.8 GW in Asia.
“The old industrial building, currently known as Goodman Texaco Centre, is in one of Hong Kong’s three major data centre availability zones,” McGarry said. “Goodman is currently the largest provider of data centres in Hong Kong.”
In Germany, the group is constructing the data centre in Frankfurt Rhein-Main urban area that will use the waste heat generated by the data centre’s operation for surrounding homes and businesses.
The five hectare site will set new benchmarks that meet the highest safety and environmental standards. The city of Neu-Isenburg is known as a smart city and Goodman will work with the local government to develop a concept for how to use the waste heat generated with a maximum output for the city’s municipal heat planning.
Christof Prange, head of Germany at Goodman, said the goal is to support local authorities expand their digital infrastructure and achieve their sustainability goals – including the decarbonisation of the public municipal heating supply.
The growth comes as JLL’s head of strategic research Australia, Annabel McFarlane, said the sector is at an important turning point in the cycle.
“Most markets are still navigating a substantial supply deficit, where availabilities are low and new stock is slow to come to market. This is clearly the case in south Sydney and Melbourne’s south-east,” McFarlane said.
“With construction cost inputs and financing costs elevated, development feasibilities will remain challenged particularly for those groups that secured land recently at high prices and this will further curb construction activity.”
