With more pressure placed upon the data centre industry to appeal to new clients and establish long-lasting relationships, knowing where to invest is key. Here, Michael Umfreville discusses his new role as Head of Data Centres at BNP Paribas Real Estate, what this means for the business and how he will lead his team to success across the UK with the company’s core values in mind.
BNP Paribas Real Estate (BNPPRE) has appointed Michael Umfreville to lead a new team focused on the leasing and land acquisitions of data centres across the UK.
Umfreville, who has enjoyed a successful career at BNPPRE in the City office leasing team, will expand his remit to focus on data centres within the firm’s alternatives division. Alongside co-ordination of the firm’s expertise in the sector, he will head up a niche team to support with aspects such as land and building transactions and lease advisory work across existing and new client bases, taking advantage of the industry’s increasing focus on data centres as an asset class.
BNPPRE’s decision to create a dedicated team comes as specialist private institutions have begun to enter the data centre investment market, including REITs, institutional investors, investment managers, sovereign wealth funds and infrastructure funds, most commonly through joint venture partnerships or entity deals.
Michael Umfreville, Head of Data Centres at BNP Paribas Real Estate, said: “With data centre transactions heating up across the core locations, BNPPRE will provide support and advice to our clients, whether they are well established or entering the market for the first time. We are already involved in a number of projects across the core markets within the UK and hope to announce these in due course.”
We caught up with Michael Umfreville, Head of Data Centres at BNP Paribas Real Estate, to find out more about the UK data centre landscape and how he will lead his team to success.
Can you tell us about your role and responsibilities at BNP Paribas Real Estate?
I’ve recently been made Head of Data Centres at BNP Paribas Real Estate. It’s a really exciting role. I’m now giving real estate advice to my data centre clients that I’ve been working with for the last two and a half years. The intention is to grow the team as much as possible and focus on our key clients’ existing requirements as far as real estate is concerned. Also intending to grow to complement the wider BNP real estate teams and, for example, we’ve got a team over in Berlin, who do a lot of work not only throughout Germany, but also in mainland Europe too. So we’re trying to keep a good balance between ourselves and them and looking to help our clients where possible.
What trends are you seeing when it comes to the leasing and building of data centres, particularly across the UK?
Over the last 24 to 30 months, BNP Paribas Real Estate has been advising clients on both the leasing and buying opportunities within the London and South-East markets. We’ve seen a number of deals where landlords and developers are seeing greater value in dealing with data centres, as opposed to industrial occupiers, which is the big competition for the data centre market. Data centres will hold longer-term leases which allows income strip style deals to be made with developers or landlords and then the landlords can further sell on that interest to annuity funds as well. So there’s a triple layer value there. It’s also been clear that a lot of the operators remain focused on ensuring their future and as such, are looking for land banking opportunities, which is another clear trend we’re seeing across the market partly because there’s a small monopoly growing in West London in particular, which a lot of the data centre operators need to try and avoid if they can.
What are the key requirements when assessing a new site and why are these important?
I think with any site that we’re looking at currently it’s about de-risking it, particularly from an operator’s perspective. If I think about my operator clients, they’ll look at a site and consider where the power is for that site and when it is coming through. And then they’ll also look at the planning position and consider whether they’re likely to get planning for a data centre on that particular site.
How would you describe the current UK data centre landscape and how do you predict this will change?
The data centre market is quite niche, one way or another and particularly within the real estate industry. So there’s a small number of people who’ve been doing this for longer than I have but there are some investors that are now growing in their multiples, and as a result, there’s a good opportunity for BNP Paribas to join this sector. But with what has been happening in regard to the resurgence of emphasis on people working from home and industries and businesses having to become more digitalised, more investors have seen this as a good opportunity to invest within the sector and take advantage of those longer-term leases.
How do you plan to take advantage of the industry’s increasing focus on data centres as an asset class?
BNP Paribas will always focus on our individual client’s needs and with that we’ll look to give impartial advice on their real estate strategies. Whether that be landlords looking at entering the data centre market for the first time – we’ve been having numerous conversations with landlords about that. And then operators who are just wanting to expand their footprint already in the market or potentially land banking opportunities for their future business growth. There’s also the opportunity to work alongside our banking colleagues, which is going to be a real opportunity which is key to our expansion. I’m speaking to the banking guys at the moment that have contacts not only within large colocators, but also within the hyperscalers. We can use those relationships to give our clients better advice on both sides.
How does the UK market differ compared to other regions in terms of data centre investment and the ways in which organisations utilise these facilities?
Having been in the industry for all of what is probably about 24 to 30 months, I’m probably not best placed to answer this, but I do know that our real estate specialists in Germany do incredibly well and are generally one of our market leaders. I don’t know whether they have a huge amount of availability but I think that particularly around the Frankfurt market it’s quite tight on availability. So how it differs I’m not sure, but I do know they have similar problems to us in the UK in terms of the amount of available stock and the ability to get consent for data centres there.
How do you plan to strategically lead your team and what is your philosophy for success?
The strategy is simple really – there aren’t many guys that specialise in data centres within the real estate market and so the strategy for us is just to provide our clients with good-quality non-bias well-researched advice on any acquisition or transaction they may be undertaking. I think that especially when you’re working with occupiers, they will focus on the technical, specialisation of their business. We can give them well-researched advice on the real estate piece. And as for landlords, they need someone who is used to speaking a data centre language and they can then translate what the most important specifics are for them to approach the data centre market.
What are some of the company’s core values and how will you carry these forward in your new role?
Innovation: people being creative and proactive in finding solutions to provide for their clients – that’s a key core value within BNP Paribas. Proximity: understanding the specific characteristics of each market in order to tailor our approach and service to any of our clients. Expertise: making the right choices to create value in every aspect of real estate. Responsibility: carrying out our activities in line with our values and sharing them with our clients. These values are all key values to our clients and how we operate in day-to-day life.