In Australia’s data centre race, power is everything
Power, not land, is now the real constraint on Australian data centre development. The investors who have it already locked in are the ones capturing the upside.
The first question any serious investor asks about an Australian data centre deal is: “Is the power confirmed?” That’s because without a grid connection that is contracted and rock solid, deals simply don’t happen.
That is the defining paradox of the market right now. Power constraints, planning timelines and the difficulty of securing buildable, connected land near population centres are making it brutally hard to bring new supply online. Yet those same frictions are handing an extraordinary advantage to investors who have already cleared the hurdles.
The barriers facing new entrants have become a moat for incumbents. Investors who can answer “yes” to the power question are sitting on something highly valuable.
In 2020, a new Australian data centre took more than 40 months to fully lease. By 2024, that had fallen to 13 months. Vacancy rates now sit at about 12%. The explosion in AI compute has pushed rack densities well beyond 100 kW, directing capital towards liquid-cooled, AI-ready facilities — a category that barely featured in construction pipelines a few years ago. Tenants are waiting for buildings that can’t be built fast enough.
