German Landlord Aroundtown Plans to Transform Offices into Data Centres Amid Rising Demand

In a strategic move to adapt to changing market dynamics, Aroundtown, one of Germany's largest listed landlords, has announced plans to convert vacant office spaces into data centres. This decision comes as the demand for data storage and processing facilities surges across Europe, driven by the rapid digital transformation of businesses and increased reliance on cloud computing.

The Luxembourg-based company revealed this initiative on Wednesday, alongside news of a tripled first-quarter profit. However, Aroundtown has been grappling with higher vacancy rates in its office portfolio, which constitutes the largest segment of its holdings. The shift to remote work post-COVID-19 has significantly reduced the need for traditional office spaces, prompting the company to explore alternative uses for its properties.

Timothy Wright, Aroundtown's Head of Investor Relations, stated that the company is in the early stages of obtaining regulatory approvals for these conversions. The process involves navigating complex zoning and technical requirements to ensure the buildings meet the high-energy and security demands of data centre operations.

To execute this vision, Aroundtown is looking to collaborate with specialized companies that have expertise in data centre infrastructure. This partnership approach aims to leverage external know-how to efficiently repurpose the spaces while minimizing risks associated with such a significant transition.

The trend of converting commercial real estate into data centres is gaining traction globally, as the digital economy continues to expand. For Aroundtown, this move could potentially revitalize underutilized assets and position the company at the forefront of a growing industry in Europe.

While the project is still in its infancy, it signals a broader shift in the real estate sector, where adaptability and innovation are becoming key to sustaining profitability. Investors and industry watchers will be keenly observing how Aroundtown navigates this transformation in the coming months.