Digital infrastructure company Equinix and PGIM Real Estate have entered into a US$575 million JV to develop and operate two xScale data centers in Sydney, Australia.
PGIM Real Estate is the real estate investment and financing arm of Prudential Financial’s global asset management business.These xScale™ data centres aims to support the unique needs of Hyperscale companies and the increasing demand for hybrid multicloud architecture in Australia, Equinix said.
The facilities in the joint venture, which will be known as SY9x and SY10x, are expected to provide more than 55 megawatts (MW) of power capacity to serve the unique core workload deployment needs of a targeted group of hyperscale companies, including the world’s largest cloud service providers. The first xScale data center in Sydney – SY9x is expected to open in Q1 2022.
Charles Meyers, President and CEO, Equinix said:”As digital transformation accelerates across all industries, hybrid multicloud is becoming the IT architecture of choice for leading businesses. These companies recognise that digital infrastructure is a source of competitive advantage, and they are leveraging Platform Equinix to directly connect and operate close to the largest cloud companies powering this infrastructure. Our new relationship with PGIM Real Estate follows our successful partnership with GIC and will enable the world’s largest hyperscalers to expand within the Equinix ecosystem in Australia.”
xScale: Scaling up
Combined with Equinix’s existing hyperscale joint ventures in Europe, Asia-Pacific and the Americas, this joint venture will bring the global xScale data centre portfolio to more than $7.5 billion across 34 facilities, and an expected greater than 675 MW of power capacity when completed and fully constructed.
Eric Adler, Chief Executive Officer, PGIM Real Estate said: “We are extremely pleased to partner with Equinix on this investment in Sydney, and we look forward to expanding this strategic relationship in other markets, thereby providing our investors further access to the increasingly important digital infrastructure sector.
To date, six xScale data centres have been opened in Asia-Pacific, EMEA and LATAM, including TY12x in Tokyo, PA8x and PA9x in Paris, LD11x and LD13x in London, and SP5x in São Paulo, with more currently under development. As per the agreement, PGIM Real Estate will control an 80 per cent equity interest in the joint venture, and Equinix will own the remaining 20 per cent equity interest.
According to a forecast by Structure Research, the hyperscale colocation market in Sydney and Melbourne, in terms of built-out critical MW capacity, will grow at a compound annual growth rate (CAGR) of 22 per cent from 2021 to 2026. With xScale data centres in Australia, hyperscale companies can add core deployments to their existing access-point footprints at Equinix, enabling their growth on a single platform that can immediately span 65 global metros and offer direct interconnection—within robust ecosystems—to their customers and strategic business partners.
Jabez Tan, Head of Research, Structure Research said:”Australia is set to build out its next wave of capacity, with the hyperscale market expected to grow about double the rate of the retail segment by 2026. There have been unprecedented levels of cloud adoption in the country. Equinix’s expansion into Australia’s hyperscale market is a timely move to address the aggressive demand among hyperscalers in Australia and will further accelerate digital transformation in the country.”
As one of the largest real estate managers in the world, PGIM Real Estate will contribute market insight and support to the joint venture with its deep knowledge of local real estate equity and debt markets applied through its 1,100+ experienced professionals across 31 offices worldwide. The joint venture is expected to close in Q4 2021, pending regulatory approval and other closing conditions.