Private equity activity drove 91% of data center M&A activity in 2022, accounting for $48 billion, according to JLL’s 2023 Global Data Center Outlook. The report points to KKR, Blackstone and Berkshire Partners all acquiring major data center operators in the U.S. and Macquarie Group and Bain Capital making big acquisitions in Asia. Institutional buyers also remain active in the market.
Last year, sales of data centers in the U.S. totaled more than $9.0 billion, according to research firm MSCI Real Assets, surpassing the $8.2 billion total reached in 2021. But the first quarter accounted for vast majority of that volume—before Fed began its quest to raise interest rates to combat inflation. In the fourth quarter of last year, only $453.6 million in data centers traded hands, the lowest volume recorded since the third quarter of 2020. MSCI’s transaction volume figures include individual property sales, portfolio sales and entity-level mergers and acquisitions.
Entity-level deals accounted for the bulk of activity last year. And with rising interest rates and overall uncertainty in investment circles, core fund buyers are shifting to value-add opportunities. According to JLL, “As investors search to maximize yields and obtain higher returns, fundraising for core assets has decreased and value-add and opportunistic has increased. This shift is likely to continue throughout 2023.”
Here’s a breakdown of data center investment sales volume by buyer type in recent years.