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Data centers

Diversify your portfolio and enhance potential for risk-adjusted returns by accessing an exciting sector experiencing unprecedented growth as a result of digital transformation and global demand for data.

Our capabilities

  • Experience: We have been investing in the sector since 2007 and have built strong relationships with key partners over this period.

  • Varied strategies: Build-and-lease to core strategy; Value-add acquisition of existing data centers; Development on a ready-to-fit or turnkey basis.

  • Knowledge: We have witnessed the asset class evolve and adapt, and our investment approach is focused on an understanding of where the most compelling opportunities exist in our markets.

  • Sustainability: Understanding of the unique development, operational, maintenance, security, and energy requirements specific to data centers, and long-term experience in responsible property investing.

  • Exposure: With investment teams in both the U.S. and Europe, we have a rounded view of the market and share our in-depth local market knowledge across the teams.

 

Data center investment dynamics

Access diversification of your portfolio by investing in a rapidly growing sector driven by rising global data demand.

The Growth Opportunity in European Data Centers Sebastian Dooley, CFA, Senior Fund Manager, Real Estate

Understanding the European data center market 

Sebastian Dooley, CFA, Senior Fund Manager, Real Estate

Demand for cloud computing and AI are making data center investments more relevant for portfolio allocations.

Watch the video

The opportunity for investors

Interior photo of a data center

  • Resiliency and inflation protection: With growth and defensive attributes, the data center industry tends to be less vulnerable to short-term economic cycles.

  • Diversification: Low correlations to traditional assets and other real estate property types.

  • Strong risk/return profile: Long leases provide cash flow from high-quality credit tenants at higher yields than most property types; Resilient occupier market.

  • Continued demand: The essential role of data is a secular trend that will accelerate, making data centres increasingly important in a diversified portfolio.

These current views, opinions, and conclusions are subject to change. The conclusions of resiliency of the data center industry, low correlations and the positive cash income produced from data center properties are based on four years of income returns, lower average standard deviation and correlation as compared to other commercial real estate property types over the last 16 quarters ending 3Q 2025. Source: NPI and Principal Real Estate. There is no guarantee that such opportunities with the data center asset class will continue, and reliance upon this information is at the sole discretion of the reader.

2025 PERE Data Center Report

Members of our Data Center team sat down with PERE to discuss how data centers have now transformed into a core sector of the commercial real estate market. For more on the evolving nature of the data center space, read the interview.

Dive into the conversation

Investment drivers

Image of screens displaying data

Data consumption

  • Society relies more and more on digital applications for work, education, transportation, entertainment, healthcare, and just about every other aspect of our modern lives.
  • The amount of digital data created, consumed, and stored is expected to grow by 2.6 times over the next five years.1
Interior photo of a data center

Data center demand

  • Processing, housing, streaming, and securing all this data has rapidly increased the demand for data centers.
  • Total commissioned power inventory across North America is over 22,000 MW, a 37% year-over-year increase and 358% higher than five years ago.2
Aerial photo of a data center

Limited supply/low vacancy

  • Data center supply is limited, and vacancy rates are very low.
  • Options to gain investment exposure to the data center sector are scarce due to limited offerings.
  • Given the highly specialized nature of the industry, experience is critical to successful execution.

Portfolio management

Principal Real Estate

Our experienced investment teams provide comprehensive, specialized, and sustainable capabilities across all four quadrants of commercial real estate—public equity, private equity, public debt, and private debt—and more recently, infrastructure investing. Whatever real estate strategy or combination of strategies you believe is right for your objectives, we can help.

United States
Managing Director, Portfolio Management
Casey Miller
25 years of experience
Managing Director, Portfolio Management
Jeff Menz
28 years of experience
Associate Portfolio Manager
Matt Hackman
17 years of experience
Europe
Director, European Data Centres
Paul Lewis
23 years of experience
Senior Fund Manager
Sebastian Dooley
8 years of experience
Learn more
 

Explore our featured insights.

Citations

1 Statista, May 2024.
2 datacenterHawk 3Q 2025.
Disclosure

Past performance does not guarantee future results. Investment guidelines are subject to change.

Potential investors should be aware of the risks inherent to owning and investing in real estate, including value fluctuations, capital market pricing volatility, liquidity risks, leverage, credit risk, occupancy risk and legal risk. All these risks can lead to a decline in the value of real estate, a decline in the income produced by real estate and declines in the value or total loss in value of securities derived from investments in real estate. Data center investment risks include power constraints and rising costs, technological obsolescence, potential overbuilding, regulatory hurdles, supply chain vulnerabilities, physical and cyber security threats, and increased competition. Data center properties will only be attractive to a unique type of tenant. Additionally, a property designed to be a data center property may be difficult to relet to another type of tenant or convert to another use and will be more likely to become functionally obsolete when compared to other properties.

Principal Real Estate is a trade name of Principal Real Estate Investors, LLC, an affiliate of Principal Global Investors.