Data and the cloud, c AI generated image by Brian Penny on Pixabay

Move aside electric vehicle battery gigafactories - it's all about data centres now. Credit: AI generated image by Brian Penny on Pixabay

The Subplot

The Subplot | Gigafactories are out, data centres are in

Welcome to The Subplot, your regular slice of commentary on the business and property market from across the North of England and North Wales.


  • Flat batteries: gigafactories are out, data centres are in as the battery business reshapes real estate
  • Elevator pitch: your weekly rundown of what’s going up and what’s heading the other way

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Megawatts going on?

The electric vehicle revolution has stalled and with it some of the energy behind the idea of green economic regeneration in the North.

Monday saw the no-going-back termination of plans for an electric battery gigafactory at a site in Northumberland – gigafactories being the massive facilities required to produce EV batteries at a scale that makes economic sense. The joint Law of Property Act receivers of the property assets of BritishVolt Properties Ltd agreed a contract for the sale of the 235-acre former power station site at Blyth in Northumberland to QTS, the data centre subsidiary of US private equity giant Blackstone Group. The site’s proximity to massive power supplies made it super-appealing as a data centre. Data centres being the vast electricity-hungry palaces within which the internet lives.

Lucky escape

The sale snatches victory from the jaws of EV defeat for Northumberland County Council, which was involved to ensure the future use of the site aligned with regional development plans and the region’s employment strategy. It could house a 750-megawatt facility, which would be Europe’s largest. A well-funded owner will surely turn the site to economic account, and perhaps kick off something much bigger. “[The site’s] scale and location make it perfect as the location for a European data hub, and the plans put forward will hopefully kickstart an entire tech industry cluster in the North East,” says receiver Bob Maxwell of Begbies Traynor Group.

Two cheers, maybe three

The difficulty is that a site intended as green investment – if you think EV cars ultimately accomplish that – ends up doing more or less the opposite, because there’s not a lot that’s green about energy-guzzling data centres. Moreover, building such a vast complex is a long way from carbon neutral, and operating it not much better. Only a few weeks ago the boss of the UK National Grid warned that data centres will demand 600% more power by 2034. It’s already up 400% since 2014. Power requirements of data centres are truly staggering, perhaps accounting for a fifth of all electricity consumption. This risks frying a power grid that is well past retirement age.

Cloudy outlook

Green or not, data centres are currently very big news thanks to the growth of cloud computing. Operators like QTS are happy to pay top dollar for sites with the best power connections – a Blythe report suggests a £20m land deal plus £110m once the thing is up and running.

A rash of proposals has appeared across the North, many of them colonising industrial sites or power stations. For instance, Microsoft has put its mark on the former Eggborough power station in North Yorkshire with landlord the St Francis Group. The site between Hull and Leeds could be functioning by 2027, with a planning application due soon. In Reddish, JLL has been advising on a 280,000 sq ft building on a 10-acre plot, a project valued at £350m. There are also plans for a 21,000 sq ft centre in Rotherham.

Gold rush

More to come? You bet, as research by CBRE shows. For the second year in a row, demand exceeded supply in the main European markets (London, Frankfurt, Paris, Amsterdam, and 10 other cities). Confusingly for property people, these things are measured in power capacity rather than floor area: Q4 2023 saw 601MW of take-up but 561MW of fresh supply delivered. Scroll back up to see the 750MW proposed for Blyth, and the true scale of the project becomes clear. Side note: outside the big cities, the vacancy rate for data centres is fairly high at 19%, so development won’t come at such a breakneck speed as it does in London.

EV is over?

While the data centre plans accumulate, maybe it’s time to check on that EV revolution? In the last few days, Tesla shed 14,000 jobs amid rumours it’s abandoned plans for a lower-price mass-market vehicle. Without lower-priced models, growth in EV ownership is never going to get anywhere, a point amplified by recent sales figures. While BMW is doing okay with its EV models, everyone else is having a torrid time. Sales growth is either slowing or going into reverse. No surprise that official estimates have been rowing back on EV adoption for some time – sales were expected to halve this year. The government responded by nudging the ban on petrol vehicles back from 2030 to 2035. Even that seems optimistic given the lack of a charging infrastructure, or power grid, capable of delivering electricity where it’s needed on the scale required. As a side note, efforts to create low-traffic neighbourhoods are also looking a bit fragile, particularly in Greater Manchester.

Maybe a gigafactory will work in the UK somewhere, someday. A Chinese manufacturer is reported to be in talks involving a 5.7m sq ft facility in Coventry, while JLR owner Tata said last year it would open a battery factory down the road from a new nuclear power station in Somerset. So far nothing has been built.


Going up, or going down?

Keep jabbing that call button, because this week we’re all heading skywards. You want offices in Leeds? You want Texans in Newcastle? Doors closing, going up.

Offices in Leeds

Last year ended on a relatively quiet note in the big regional office markets and the final quarter was solid rather than roaring after a hold-steady kind of year. In Leeds, take-up in 2023 was up 5% on 2022. The question was, will 2024 mean more of the same or a change in pace? With Leeds Q1 2024 figures now in the answer appears to be: a change in pace.

In the first three months of the year, Leeds take-up, according to the Leeds Office Agents Forum, was 249,700 sq ft, a stonking 122% up on Q4 2023. A sharp rise in the average transaction size was responsible including 25,300 sq taken by EY at Wellington Place and 37,900 sq ft nabbed by QBE at West Village. Rents are holding up well, with a plurality of deals at over £30/sq ft. With supply constrained, the coming year could be a winner.

Texans in Newcastle

Texan investment giant Hines has taken the plunge into Newcastle build-to-rent housing. Hines European Property Partners is to back Olympian Homes’ 519-unit development at Pottery Lane, part of the Forth Yards regeneration. The site has all the usual selling points – close to the right kind of techy jobs and the city – and will appeal to the usual gym-loving urban demographic. So far, so yawningly unremarkable.

The interesting thing is that Hines chose to fill its big Texan boots with Newcastle BTR. Until recently Newcastle was a second-division BTR location (JLL placed it 14th in the UK), and Hines had difficulty seeing the UK regions – they literally escaped notice because the capital values were too small.

A big re-think has taken place since then, and Newcastle feels like an early-stage market in which a well-funded investor could do very nicely. Strawberry Place, the £145m BTR scheme next to the stadium at St James’ Park, is now back on thanks to a £250m deal with Homes England signed in February.

There’s a chance to chew over how BTR markets get to the next level at Place North West’s rental market event on Thursday 9 May.

Get in touch with David Thame: [email protected]

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