Data centre leasing: find capacity and compare lease terms.

Standard commercial property leases do not translate to data centres, where cost and operational risk sit in electrical capacity reservations, utility pass-through formulas, PUE caps, and phased ramp schedules.

High-density suites and multi-megawatt halls in core metros frequently pre-let before construction completes. Buyers working against tight deployment dates often face a choice between unsuited existing space or slow bilateral negotiations.

Approaching operators one at a time makes it difficult to benchmark take-or-pay minimums, transformer loss allocation, and expansion options across competing campuses.

Primary structures in data centre leasing

Colocation and technical property agreements rely on two primary legal structures: real property leases and service agreements. The chosen model determines operational control, accounting treatment, and ongoing maintenance obligations.

• Master Services Agreement (MSA): Common in multi-tenant colocation. The operator delivers space, electrical capacity, cooling, and security as an integrated service. The occupier receives a contractual licence to install hardware within assigned racks, dedicated cages, or private suites rather than a registered leasehold property interest, leaving central site maintenance with the operator.
• Single-tenant and powered-shell leases (Triple Net): Single-tenant facilities and powered shells rely on real property leases. Under a triple net lease, the occupier pays base rent alongside property taxes, building insurance, and maintenance. In a powered shell, the occupier funds, installs, and manages the mechanical and electrical fit-out directly.
• Turnkey wholesale agreements: An intermediate approach where the facility owner operates the central technical plant, delivering conditioned power and cooling to the data hall boundary under modified gross leases or capacity contracts. This provides dedicated space without upfront capital outlay for central plant.

Key diligence questions for occupiers evaluating lease structures:

• Does your organisation require operating-cost treatment under a service contract or capital lease accounting?
• Who holds legal title to the land, and what rights exist if a superior landlord defaults?
• Which party maintains and replaces primary electrical and cooling plant over the term?

Power metering and pricing mechanics

While standard commercial real estate prices space by floor area, data centres structure pricing around electrical capacity and energy consumption:

• Gross rates: A single recurring charge covers space footprint, cooling, and an agreed power ceiling. Gross pricing simplifies billing, though occupiers can overpay if workloads draw less power than contracted.
• Capacity reservation with metered pass-through: The occupier pays a fixed reservation fee per kilowatt or megawatt of dedicated capacity, while electricity consumed by IT equipment is metered and billed at pass-through utility rates.
• Power Usage Effectiveness (PUE) benchmarks: Contracts link billing to facility cooling efficiency. Agreed PUE caps protect occupiers from absorbing costs caused by inefficient plant.

Key diligence questions for power provisions:

• Where is electricity metered, and who absorbs transformer and distribution losses?
• How are utility tariff changes and green energy surcharges calculated and passed through?
• Does the contract enforce take-or-pay minimums before full IT deployment?

Key terms in commercial negotiations

Negotiating technical agreements requires balancing long-term capacity security against commercial flexibility:

• Phased ramp schedules: Contractual ramps defer reservation fees on expansion capacity until agreed energisation dates.
• Service levels and remedies: Agreed thresholds govern power continuity, temperature, humidity, and site access, backed by service credits and termination rights for repeated outages.
• Expansion protections: Pre-emption rights or options protect adjacent whitespace and scheduled power tranches.
• Assignment and subletting: Terms state whether an occupier can assign capacity to affiliates or sublet unused power to third parties.
• Reinstatement obligations: Surrender terms specify whether cabling and equipment must be removed at term end or left in place.
• Audit access: Inspection rights cover maintenance logs, environmental records, and sub-meter calibration.