The New Mixed-Use Must: Data Centres

Some of the UK’s biggest real estate owners are adding a new element to mixed-use schemes, one which would have been unthinkable even a few years ago: data centres. 

Tristan Capital, Aermont Capital and a joint venture between Reef Origin and UBS are all including data centres as part of wider schemes, with some of the proposed projects costing £1B or more. 

Sometimes, the plan is to entice tenants with access to the computing power that would be created by data centres. In some instances, owners are pivoting away from previous uses. 

But in all cases, owners are looking to tap into the demand for data centres created by the increasing digitisation of society, a demand that is only being supercharged by the growth of artificial intelligence. 

Reef Origin sees data centres as a way to drive activity throughout a mixed-use project.

“We were asking, what is it that differentiates us, what's going to drive rents and demand [for other commercial uses like science and technology property]?” Reef Origin Chief Executive and Executive Chairman Piers Slater said. “There are a lot of companies that want access to that computing power.” 

Last month, a joint venture between Reef as development manager and the real estate investment business of UBS as asset manager won planning consent for two new data centres at Elevate, the duo’s 30-acre life sciences and knowledge campus in Stevenage, 25 miles north of London. 

Reef is already working on power upgrades at the site to deliver around 19 megawatts of power by Q1 2027, and the site ultimately has capacity for 110 MW of data centres. 

The site, where GSK is an anchor occupier as part of a wider 1.6M SF science and knowledge cluster, already had one small data centre, Slater said, and after building out the first phases of the scheme, the JV decided to expand the offering. 

The data centres could be leased to standalone occupiers that have nothing to do with the wider campus. But Reef is responding to changes in the science and technology sector that may mean tenants from that world want to locate near data centres and utilise their computing power. 

“A lot of wet lab demand very quickly has gone into the data centre economy,” Slater said.

Life sciences companies are increasingly undertaking initial experiments using AI before refining findings in a lab. 

“You go to a building to do things you can't do at home,” he added. “Sometimes that's just being with people, but other times, it’s about being around technology because you need to visualise something you can’t do with the cloud, or to be near quantum computing.”

Other examples where owners are integrating data centres alongside other uses include Pinewood Studios, south west of London, where earlier this year, owner Aermont Capital won planning permission to build a £1B campus of four data centres, which are reported to have a potential power capacity of 150 MW. 

Aermont had planned a major expansion of the studio and production space at Pinewood, the famous studio that spans more than 200 acres and where franchises such as James Bond are filmed. The expansion was looking to piggyback on Aermont’s success in signing content creators like Amazon, Netflix and Disney on long leases.

But a cutback in the creation of original programming by such companies rendered an increase of studio space unviable, Pinewood said in 2024. Instead, Aermont has pivoted to data centres. 

At an earlier stage in the process is Tristan Capital, which plans to include data centre capacity of an as-yet-unnamed size at Cody Technology Park in Farnborough, south west of London. 

Tristan bought the 407-acre, 1.3M SF campus from defence company QinetiQ for £112M in 2024, with the company taking a 15-year lease on part of the site following the sale. There are 96 other tenants on the site, and Tristan is planning a comprehensive redevelopment, including the new data centre capacity, to create a science and technology cluster. 

On a smaller scale, Japanese telecoms firm KDDI is buying the 1.1M SF Inventory Estate in Docklands, east London, from LaSalle Investment Management and Trilogy Real Estate for about £250M.

Inventory Estate comprises two office buildings totalling 483K SF primarily let to education tenants and bringing in £16M of income. 

There is also planning consent in place for a 376K SF data centre on the campus. That project accounts for 10% of London’s pipeline of data centre developments with both power secured and planning consent. 

Slater said the returns from data centres are comparable to that of other uses, with the added bonus that demand from occupiers is strong and appears to be resilient. 

The downside is, as with all sectors, construction costs have risen in the past few years and are continuing to increase. The scale of data centre projects means they are highly capital intensive, and a small rise in costs in percentage terms can lead to a large increase in the amount of capital required in absolute terms. 

Beyond Elevate in Stevenage, Slater said Reef is looking at sites across the UK where there is an opportunity to colocate data centres, energy storage systems and ecology or food production sites, as the users are highly complementary. Data centres use a lot of energy, but the heat produced can be reused in district heating systems, either for general commercial buildings or agriculture. 

From a design perspective, it is difficult to truly integrate a data centre into a mixed-use campus — security needs to be high to ensure data privacy for end users. That usually means big fences and security guards, rather than the open colocation such schemes are usually aiming for. 

But Slater said exterior design of buildings and landscaping around them can go a long way to softening the impact of assets that, for a long time, were little more than a dark grey rectangular box. 

Not every mixed-use campus will be able to incorporate a data centre — the power required by the data centres being used to power AI models in particular means they are much more likely to be standalone facilities, located wherever there is the energy available to run them. 

But as the way people use AI and data evolves, the strategy could become more prevalent, particularly on schemes close to urban areas.

“I don't see it as a trend, but I could see how it's tempting for certain investors to want to do so,” CBRE Head of Data Centre Research for Europe Kevin Restivo said. 

“In years to come, as the delivery of AI services to businesses and consumers becomes a bigger factor, then I think you could see smaller data centres [as part of mixed-use schemes] become more important.”