2 minute read time
October 16, 2020

Sign up today to get the latest blogs delivered straight to your inbox.

You may think that increased online shopping and the shift to work from home is why data centres are having a moment. Montreal-based David Cervantes runs CBRE’s data centre business with Scott Harper in Toronto and notes that the true driving force behind data centre demand has nothing to do with e-commerce.

Believe it or not, it’s actually TikTok, the video-sharing social networking service.

“The takedown of data centre space by TikTok is the talk of our industry, not COVID,” Cervantes says. “Data centre activity and demand is all about eyeballs, usage rate, and the new apps that are going to deliver media to us. Ultimately, it’s all about the phones in our pockets.”

Investor darlings

They may not be something we think about day to day, but data centres are the darlings of the commercial real estate investment world right now.

A new report from CBRE notes that data centres have been one of the real estate sectors least affected by COVID-related issues and the resulting recession, underscoring the critical role of data centres in supporting business activity, social interactions and binge watching.

“The increase in remote working due to COVID-19 reinforced the importance and reliability of data centres and the networks that support them, but they underpin so many of our daily activities.”


"Data centre activity and demand is all about eyeballs, usage rate, and the new apps that are going to deliver media to us. Ultimately, it’s all about the phones in our pockets."
David Cervantes

Toronto leads the way

The report points to the Greater Toronto Area, which is seeing unprecedented levels of hyperscale growth in data centres. Despite large amounts of capital wanting to deploy in the market, limited supply of industrial real estate in Toronto continues to hold back data centre growth.

In Montreal, growth in this sector can be attributed to the expanding footprint of cloud providers there. Many of North America’s largest DC providers are now located in Montreal, which is changing negotiations. Minimum deal size thresholds are increasing and coordination with negotiations in other major cities are increasingly common.

Industrial, Eat Your Heart Out

While industrial real estate is getting plenty of investor attention due to its stability and performance in the time of COVID, data centres achieve all that and more.

“Data centres are actually destroying the performance metrics of industrial,” says Cervantes. “REIT performance has been very strong in this space, and asset class allocations are scaling upwards among large investor groups.”

For REIT executives, that’s almost enough good news to merit a TikTok dance.

Stay in the know

Subscribe today and join hundreds of professionals who get the latest blogs delivered straight to their inbox.

Most Recent Insights

6 Reasons To Feel Good About Canadian Retail

6 Reasons To Feel Good About Canadian Retail

October 27, 2020
Advantage Insights
October 27, 2020
HOOPP’s New Logistics Hub Is Another Vote Of Confidence For Industrial Real Estate

HOOPP’s New Logistics Hub Is Another Vote Of Confidence For Industrial Real Estate

October 22, 2020
Advantage Insights
October 22, 2020
How TikTok Is Driving Demand For Data Centres

How TikTok Is Driving Demand For Data Centres

October 16, 2020
Advantage Insights
October 16, 2020