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Money flows into Canadian data centre investment market where returns out-perform other classes of real estate

Demand is growing for data centres which at their simplest are offices designed to house computers rather than people. Here is an interior of a data centre run by Digital Realty Trust Inc., an American firm that is expanding to Canada.

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Another Digital Realty data location. With its relatively cold climate, Canada, and the Greater Toronto Area in particular, is gaining a reputation as a safe and affordable place for these specialized buildings that house heat-generating equipment. Digital Realty has about 120 properties in 32 markets across Europe, North America, Asia and Australia.

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“There is an awful lot of money flowing into the data centre investment market right now because the returns are better than any other class of real estate. And the Canadian market is undersupplied,” explains Randy Borron, a senior vice-president at commercial real estate brokerage Cushman & Wakefield Ltd. Here, a data centre owned by Allied Properties Real Estate Investment Trust at 151 Front St. West in Toronto.

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“It’s a fascinating area, the growth is explosive,” Allied chief executive officer Michael Emory says. The company bought 151 Front St. in Toronto’s core in 2009 for about $192-million. The property, which Mr. Emory notes is “like a data centre on steroids,” is appraised at closer to $400-million today.

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Allied has since created a new data centre at 905 King St. W., and is now renting space in the CBC building at 250 Front St. W. for further data centre expansion. Digital Realty surveyed large corporations in North America and found that 98 per cent planned to expand their data centres in 2013 or 2014, the highest percentage in seven years.

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