Data centres to perform well, but risks are growing

New MSCI coverage of data centres in the UK and US not surprisingly show the sector strongly outperformed over the past decade. But while returns are still strong in the US, in the UK the sector is now underperforming the all-property average as yields have ticked up and rental growth has slowed. Yet with demand expected to remain strong and vacancy low, we expect rental growth will soon pick-up and push data centres toward the top of our sector rankings in the UK and US.