Data centres: strong momentum, familiar constraints

Our London real estate breakfast briefing on Tuesday 30 June brought together a packed auditorium to discuss “Data Centres – opportunities, challenges and market trends”. Alongside presentations from Kirsty Barnes and Barry Gross, co-leads of Simmons & Simmons Data Centre and Digital Infrastructure team, we were joined by an expert panel comprising Mark Delahunty (BGO Data Centres), Spencer Lamb (Kao Data) and Sean Devereux-Cooke (Société Générale).

During the session, we polled attendees on their current engagement with the sector, what is driving interest, and what may be holding it back. The results provide a clear and consistent picture: conviction in the asset class is high, but delivery constraints remain front of mind.

A sector now firmly on the strategic agenda

The first striking takeaway is just how embedded data centres have become. 77% of respondents identified the sector as either a core focus (27%) or a growing strategic priority (50%), with a further 23% either actively exploring or monitoring opportunities. Notably, no respondents viewed the sector as irrelevant.

This aligns with what we are seeing in the market: data centres have moved beyond a niche alternative asset into a mainstream allocation for investors, developers and lenders alike. The breadth of attendees at the event reinforced this shift, with strong representation from across the real estate and infrastructure spectrum.

Fundamentals, not hype, are driving investment

When asked what most attracts them to the sector, respondents pointed overwhelmingly to fundamentals. Strong demand and growth dynamics led the way (48%), followed by long-term, infrastructure-like characteristics (26%).

Interestingly, while AI and the broader digital economy are often seen as the headline drivers of the sector, only 13% selected this as their primary motivation. This suggests that, for many, AI is already “priced in” to the broader demand story rather than viewed as a standalone investment thesis.

Diversification benefits (9%) ranked lower, reinforcing the view that capital is primarily being deployed on the back of scale, resilience and predictability of returns. This also reflects that it is challenging to be a small player; the sums involved are so large that a single investment can quickly tip the balance in a portfolio.

Power remains the defining constraint

If the demand story is clear, so too is the principal challenge. Power and infrastructure constraints were identified as the single biggest concern or barrier by 40% of respondents—more than double any other factor.

This was a central theme of our panel discussion. Access to grid capacity, timing of connections and the cost of securing power are increasingly shaping site selection, development timelines and ultimately valuations.

Capital intensity (20%) and complexity or lack of understanding (17%) were the next most cited concern, underlining that while appetite is strong, execution remains complex. By contrast, planning (5%) and ESG concerns (7%) were less frequently cited as primary obstacles, although both featured prominently in the broader discussion.

An overwhelmingly positive outlook

Perhaps the most compelling result is the forward-looking sentiment. 82% of respondents expect their involvement in the sector to increase over the next three to five years, with nearly half (48%) anticipating a significant increase. No respondents expect to reduce their exposure.

This mirrors wider market data, which continues to point to growing allocations to digital infrastructure globally. It also reflects the structural drivers underpinning the sector—from cloud adoption to AI workloads and enterprise digitalisation.

What next?

Taken together, the poll results confirm a market that is both highly engaged and increasingly sophisticated. The opportunity is widely recognised and capital is ready to deploy. However, the ability to unlock that opportunity will depend on navigating a relatively concentrated set of challenges—most notably power availability, cost and delivery.

In the coming weeks, we will explore some of these themes in more detail, including the evolving power landscape, approaches to structuring and financing, and how market participants are responding to sustainability pressures.

If the discussion on 30 June is any indication, the conversation around data centres is only just getting started.