Macquarie Technology forks out $240m to pick up data centre site from Holdmark

Macquarie Technology Group has picked up a Sydney site approved for 1400 apartments with plans to turn the property into a major data centre.

A site on Talavera Road, Macquarie Park, once earmarked for apartments, will become a data centre.

Macquarie Technology Group has added fuel to the country’s AI-driven data centre boom by snapping up a sprawling site in Sydney’s north once earmarked for high-rise apartments.

ASX-listed Macquarie Technology will pay $240m for the Macquarie Park site that has been caught up in the complicated state planning system for almost a decade. The Talavera Road property, which it will buy via an option agreement, is near another data centre development it has in the suburb.

The new property had been long earmarked for about 1400 apartments with Macquarie Technology saying it was bought from an established developer.

Its removal from the pipeline will put pressure on the area’s capacity to contribute to housing targets, with the Albanese government sticking to plans for 1.2 million new homes over the next five years, despite Treasury warnings this could not be achieved with present policy settings in place.

The property is linked to developer Holdmark – which is in line for a windfall as it picked up the site for just over $30m in 2014. It is thought to have moved to sell after approaches from data centre developers keen to gain a foothold in the area.

Sydney’s north shore is emerging as a hub for the huge developments with industry super fund group ISPT also readying a site for a massive data centre, which will be a first for the manager as it diversifies away from traditional properties like offices and shopping centres. It is working on a site at Julius Ave, North Ryde, and expects interest from a number of major operators.

The Goodman Group and the rival Stockland also have projects underway in Macquarie Park, with local authorities concerned that the power-hungry centres could crowd out housing and other services in areas that are relatively close to Sydney’s CBD.

An artist’s impression of Macquarie’s $350m IC3 Super West data centre.

Macquarie Technology said its planned data centre would be aimed at hyperscale, AI, cloud, and government clients. The company is known for its data centres in major capitals and counts large multinationals and the federal government among its clients.

While the deal is subject to the site being subdivided, it continues the trend of longstanding landowners cashing in on properties that are valuable to data centre developers keen for locations with good access to power.

In one of the best known sales, billionaire Ian Malouf, known by the moniker “Australia’s richest garbo”, last year clinched the sale of a $353m parcel of land to ASX-listed NextDC.

The deal did not affect residential supply and instead brought to an end Mr Malouf’s long-held ambition to build a huge waste-to-energy plant in Sydney’s Eastern Creek. NextDC has earmarked the 248,000sq m of developable land area for a huge data centre.

Others have also cashed in the boom, with Asian warehouse giant ESR selling off a site in Sydney’s Erskine Park for $142m to data centre group Stack Infrastructure, which is planning a major complex. Stack is set to pour about $650m into the project.

Swiss private equity giant Partners Group paid about $1.2bn to buy Australian data centre operator GreenSquare DC and it also picked up a site from Dexus in Sydney for a major facility.

But the most active players across Sydney have been sector giants the Goodman Group developing sites in areas ranging from Lane Cove to Mascot, and US behemoth Amazon.

Goodman Group CEO Greg Goodman has flagged his company will focus on developing centres around the world and locally, where it is focused on converting older industrial and business parks into data centres. Amazon will pump $20bn into Australia over five years to expand its data centre network, cloud infrastructure and energy generation, including new investment in three solar farms across Victoria and Queensland.

Amazon Web Services chief executive Matt Garman said last month the funding pledge was the “largest investment ever announced by a global technology provider in Australia”. It includes expansions of Amazon’s data centres in Sydney and Melbourne, and investment in three new solar projects.

More deal-making is expected in coming months as the scramble for sites continues.

The industrial property market is still in demand thanks to the e-commerce surge but suburban office buildings have been struggling and converting those projects into other uses is far more lucrative with the contest between data centres and apartments to continue.

Originally published as Macquarie Technology forks out $240m to pick up data centre site from Holdmark