Developer Connolly Has Decided To Buy Its First Retail Properties

Data centers are proving they can survive natural disasters without downtime. But are they prepared to meet the challenges created by a changing climate and a changing industry?

Data centers are one of the few digital infrastructure assets to have fared well during recent natural disasters, from Hurricane Ida earlier this month to the winter storms and paralyzing blackouts throughout Texas last winter.

Data center operators are becoming increasingly sophisticated when it comes to navigating these events and resulting failures of critical infrastructure. Yet as digital transformation necessitates building data centers in more vulnerable locations and climate change makes severe weather events more frequent, experts say that more proactive investment is needed to shore up infrastructure outside the data center walls.

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Recent life sciences real estate reports paint a picture of overwhelming demand and a great opportunity for new developers.

A record $26B of venture capital funding poured into the sector in the first six months of 2021, according to Newmark, setting loose scores of well-capitalized startups seeking lab space. CBRE found that the 15.6M SF of speculative lab construction underway nationwide is nearly 30% leased, signaling developers can’t keep up. The overall vacancy rate for the top 12 biotech clusters, per CBRE, is just 5.6%.

But the reality is a select few developers have been able to cash in. In addition to difficulties finding talent, and the special requirements and expertise required to build lab spaces, the cost of such projects is prohibitive and the risk of failure is much higher than traditional office buildings. 

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