Bank transfers, viral videos or the response of a generative Artificial Intelligence produce tremendous noise. In a room of about 400 square meters of an industrial warehouse in the San Blas-Canillejas neighborhood, in Madrid, a century-old cabinet with computers – called racks – work 24 hours a day, 365 days a year. The arduous task of these racks generates about 42º of temperature in the so-called ‘hot aisle’, to where the servers emit the heat generated by the transit of 65% of the internet traffic in Spain. The work of Digital Realty, the company that owns the so-called MAD-1 to which La Información has had access, is located around the ‘cold hallway’. There, a huge fan, about two meters high and three meters long, blows air at 18º to cool the machines, as a company official shouts, trying to escape the noise of the cooling.
Data centers have become one of the hottest assets in the real estate sector. In Spain, Merlin Properties, the largest listed real estate investment company on the Ibex 35, expects that by 2028 the digital segment will account for more than half of its rental income, surpassing that of other traditional properties such as offices or shopping centers.
However, data centers have little or nothing to do with bricks or labor. “To build an office, the builder puts 85% into building the property and 15% into providing it with facilities. In the data center the numbers are reversed. It is 85% equipment and 15% the ‘ real estate”, exemplifies Robert Assink, general director of Digital Realty in Spain.
The general director of Digital Realty in Spain, Robert Assink, in one of the rooms at MAD-1
The business measures its accounts based on the number of cables -connectivity- and the installed electrical power -to operate the computer equipment and cooling-. Digital Realty supplies the electricity, not the connectivity, but they build the buildings in strategic locations to enjoy direct access to the suppliers’ networks, so companies that install their data there will be able to “connect with whoever they want,” they say.
On the other hand, with higher electrical power, income grows. The ‘data center’ will be able to have more and larger rack cabinets, which can be rented by more companies such as Acciona, FCC, Renfe, Airbus, Supermercados Día, Netflix or Disney (to mention only some of the MAD clients). -1), who will exchange your data within the facilities to carry out a bank transfer or project a series on a streaming service.
A real estate business?
Managing a data center has nothing to do with managing an office building, but the business has the same fundamentals. On the one hand, a property that houses a data center can have miles of square meters built, so companies need enormous capital to make investments.
For example, MAD-4, Digital Realty’s latest data center that is still in the commissioning phase, will have a total constructed area of more than 35,000 square meters (around five football fields) and received an investment . of 200 million euros.
But these properties are relatively empty in relation to their size, so much so that the magnitude of the projects does not match current urban planning laws. The firm indicates that due to existing urban planning regulations, projects of these sizes are required to build parking spaces in line with the square meters available in the work environment. Therefore, for the new MAD-4 project, Digital Realty is obliged to build 360 parking spaces for a staff of around 60 workers.
The landlords of the internet
The way of receiving income is also similar to that of traditional real estate. The firms rent their space in the property and pay a monthly fee for the infrastructure. The only difference is that clients do not pay square meters, but for electrical capacity (kilowatts, megawatts…).
One of the connection rooms of MAD 1
But the business is not based on storage. Only 20% of the information is transferred from a data center to offices or residences, the remaining 80% is transferred within the centers themselves. “We are paid to keep the data in motion,” says the general director.
The formula would be similar to that of airports: “Barajas’ task is not to park planes. The airlines arrive, unload passengers, load and leave. We provide the infrastructure for that to happen with the data.”
An electricity substation
‘Data centers’ are measured in megawatts (MW). Energy accounts for between 25% and 30% of the company’s operating costs and Digital Realty consumed 600 GW/hour last year, which is equivalent to the annual expenditure made by between 100,000 and 150,000 homes.
The supply of the company’s properties comes from renewable energy, but the fundamental thing is security and consistency, so that the network does not stop working at any time.
Two substations transfer electricity directly to the data center, for whose management the property has several of its own transformation centers that convert medium and high voltage energy into low voltage. “We put in more than what is needed for redundancy,” says Raquel Figuerelo, director of marketing and business development, while showing countless rooms of electrical distribution panels and transformers. “It’s like having a station at home,” she says.
In the event that both substations fail, diesel generators with a capacity of 6 MW are added to this network (double the consumption of MAD-1). To ensure reliable supply, the company buys batteries from different brands and no more than two batches per manufacturer.
The MAD-1 battery warehouse
The high space needs of these companies are located in this section. Figeruelo assures that of the 100% of the useful surface of the data center, half is dedicated to energy installations and cooling systems and only 50% is available to place the rack cabinets, where the economic performance of the data center is concentrated. the company.
A business that is growing exponentially and with Madrid at the center
Interest in data centers has grown exponentially, in line with technology. MAD-1 was built in 2000 and took 12 years to supply its supply, while MAD-3 (the company’s last center to be 100% operational in 2019) only took three, according to Digital Realty.
Artificial Intelligence has only increased expectations, especially for Madrid, the main ‘hub’ of Spain, which will receive direct investments of 6.1 billion euros until 2026, according to a report prepared by the sectoral association Spain DC.
The connections of one of the MAD-1 rack cabinets
The development of the industry in the capital is driven by several factors. First, European demand is bottlenecked at its core. In the European hub FLAP-D (acronym for Frankfurt, London, Amsterdam, Paris and Dublin) new projects amounting to 335 MW were completed last year, compared to a demand of 355 MW – which increased from 280 MW in 2022 .-, according to a Deutsche Bank report on the sector.
On the other hand, the geographical position of Spain in general – and Madrid in particular – make the peninsula one of the most promising regions for this segment, since up to seven submarine cables connect Europe, through the country, with the US, South America . , Asia and Africa.
Among them, the fastest internet highway in the world: it leaves the Atlantic coast of the US until it reaches Bilbao, passes through Madrid, continues to Marseille and continues through other parts of the Mediterranean until connecting with Asia. This leaves Madrid as the distribution center to northern Europe and two continents.
