The commercial property landscape in Wales is experiencing a significant transformation with the growth of data centres.
This sector, often heralded as the backbone of the digital economy, is expanding rapidly, bringing with it both opportunities and challenges. Key developments in Newport, Bridgend, with further interest elsewhere, are positioning Wales as a vital hub for data infrastructure.
Recent high-profile acquisitions and projects highlight the importance and potential of data centres in Wales:
Microsoft’s Newport Data Centre: Microsoft has acquired the former Quinn Radiators factory on Imperial Park, a 1.1 million sq ft building on 40 acres. Microsoft are to develop a state-of-the-art data centre, which secured planning permission in July 2024 for 750,000 sq ft across data halls. This move by a global tech giant highlights Newport’s strategic significance in the digital landscape and builds on the data cluster in the area.
Vantage’s Acquisition in Bridgend: Vantage Data Centers has acquired the former Ford site in Bridgend. This former engine plant totalled around 1.7 million sq ft on a total site of around 150 acres although the brownfield area is smaller. Again, this site is poised to become a key data centre, supporting the increasing demand for digital services.
There is interest elsewhere in South Wales with the planning register suggesting a potential project at Bro Tathan in the Vale of Glamorgan.
Wales is strategically located between data clusters in London and the Republic of Ireland and with proximity to the transatlantic data which land in Devon and The Gower. Access to digital fibre spines and grid connections are key locational criteria.
Data centres have evolved through three significant waves:
1990s – Web.com Era: The first wave of data centres emerged with the rise of the internet, supporting web hosting and the burgeoning online economy.
Past Decade – Cloud Computing: The second wave was driven by the exponential growth of cloud computing, with data centres becoming essential for hosting vast amounts of data and applications for businesses and consumers alike.
Present – AI and Advanced Technologies: We are into the third wave, propelled by artificial intelligence (AI) and other advanced technologies. This wave is generating unprecedented demand for data storage and processing capabilities, necessitating the expansion of data centre infrastructure.
While data centres are crucial for supporting the digital economy, they have faced criticism for not creating enough jobs and for their high energy consumption. However, both of these concerns are being addressed.
The data centre industry is evolving, with a significant refit cycle creating more job opportunities. The construction, maintenance, and upgrade of these facilities require skilled labour, contributing to local employment.
Advances in photonics technology will see the use of wavelengths of light rather than electrons to transfer data more quickly. Transitioning from electron-based to photon-based systems improves bandwith and operational efficiency but also reduces the need for extensive air conditioning and improves energy efficiency. These improvements are critical as the industry strives to minimise its environmental footprint.
Data centres are more than just large facilities housing servers. They are integral to the digital infrastructure that supports everything from online shopping and streaming services to complex AI computations and big data analytics. As such, the growth of data centres in Wales represents a strategic investment in the future of the region’s economy with the added benefit that fixed capital invested in Wales anchors the digital infrastructure in place.
These centres attract technology companies, stimulate local economies, and enhance the digital capabilities of the region. They also play a crucial role in ensuring data sovereignty and security, which are increasingly important in today’s interconnected world.
The future looks bright for the data centre market in Wales. As the demand for digital services continues to grow, so too will the need for robust and scalable data infrastructure. The opportunity is there for Welsh Government to create a data centre strategy.
The developments in Newport and Bridgend are just the beginning, with more projects likely to follow if Wales capitalises on its strategic advantages and encourages this investment.
