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Microsoft files for $1.3bn Sydney data centre

New campus could join a growing pipeline of data centre developments in Australia which has this year alone seen over US$2 billion committed into building new facilities.

By João Marques Lima

Co-founder and Editor, The Tech Capital

4 Mins

November 22, 2021 | 7:00 AM GMT

Microsoft (NASDAQ: MSFT) is reportedly seeking permission to build a $1.3 billion hyperscale data centre campus in Sydney as the public cloud provider treads towards its target of deploying 50 to 100 facilities around the world annually.

In Australia, the company is now gearing up to deploy capital to develop a 190MW facility in Kemps Creek, to the west of the city, according to AFR.

The project is designed for a 14.4 hectares piece of land and is to be developed by Frasers and local fund manager Altis Property Partners as part of a larger 118-hectare industrial estate development taking place in the same area.  

Engineering firm Arup is behind the proposed Microsoft data centre campus which is set to account to two buildings with two floors each and a land area of 61,000 sqm/656,600 sqft. As much as 50,000 litres of water are to be used for cooling purposes.

Microsoft currently operates three data centre regions in Australia from Sydney, Melbourne and Canberra from local provider Canberra Data Centres’ facilities. Canberra DC is currently deploying AU$1 billion (US$730 million) in capital to construct its data centre footprint across Australia and New Zealand.

According to the New South Wales Department of Planning, Industry and Environment (DPIE), in the last five years, three data centres with a combined capital commitment of $1 billion have been approved for the Sydney region.

“There is already six more in the pipeline and our recent policy changes to lower the threshold for them to be considered state significant developments, means we will likely see more coming through the system soon,” the department’s executive director of energy and resource assessments, Clay Preshaw told AFR.

Australia has in recent months seen an upsurge in digital infrastructure investment from national and international players.

Last week, Google (NASDAQ: GOOGL) promised to invest AUS$1 billion (US$736 million) in Australian digital infrastructure and data economy over the next five years.

Earlier last month, hyperscale data centre operator AirTrunk unveiled plans to build a new Western Sydney data centre, named AirTrunk SYD3 (SYD3). The facility will be the largest single campus in the Asia-Pacific region (excluding China) at 320+ megawatts (MW) of capacity and will represent a “a new multi-billion-dollar investment into the State of New South Wales”.

Also recently, PGIM Real Estate and Equinix, Inc. (Nasdaq: EQIX) have agreed to establish a US$575 million joint venture in the form of a limited liability partnership to develop and operate two xScale data centres in Sydney, Australia.

According to market think tank Structure Research, Australia’s data centre colocation market is a segment on the cusp of an aggressive growth wave fuelled by hyperscale cloud.

The Sydney market is currently home to 51 unique colocation data centres with estimated total inventory in 2021 of 438MW.

The market is projected to generate US$1.054 billion in 2021, with a five-year CAGR of 17%.

Melbourne tracks behind Sydney with 30 unique colocation data centres and is projected to generate US$489 million in 2021 with a five-year CAGR of 17.6%. Melbourne’s total inventory in 2021 is estimated at 174MW.

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João Marques Lima

Co-founder and Editor, The Tech Capital

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