SEGRO and Pure Data Centres Group forge £1bn partnership to develop London hyperscale facility

SEGRO and Pure Data Centres Group, owned by Oaktree, have announced a landmark partnership to construct a fully fitted data centre in Park Royal, London. This £1 billion joint venture aims to address the growing demand for hyperscale digital infrastructure in a prime London Availability Zone. By combining SEGRO’s industrial property expertise with Pure DC’s deep technical knowledge in data centre development, the project positions itself as a significant step forward in the UK’s digital expansion.

The joint venture, SEGRO Pure Premier Park Data Centre Limited, will develop a 56MW hyperscale facility on a 10-acre site within SEGRO Park Premier Road. The project is designed to support next-generation cloud computing and artificial intelligence (AI) applications, catering to the needs of hyperscalers seeking strategic expansion within a power-constrained London Availability Zone. Given its proximity to London’s financial and technology hubs, demand for the data centre is expected to be substantial, reinforcing its potential as a high-yield investment.

Why Is SEGRO Expanding Into Fully Fitted Data Centres?

SEGRO has been a leading name in industrial real estate for decades, primarily focusing on logistics, warehousing, and powered-shell data centres. The company has long provided infrastructure for data centre operators, but this marks its first direct foray into fully fitted facilities. With a 2.3GW land-enabled power bank, SEGRO has identified the data centre sector as a key driver of future value creation, leveraging its existing portfolio to optimise returns.

David Sleath, CEO of SEGRO, has underscored the strategic importance of this move, stating that it enables the company to capture more value from the growing demand for hyperscale computing. The shift from powered shells to fully fitted facilities allows SEGRO to deploy capital at scale and accelerate its presence in the digital infrastructure space. By partnering with Pure DC, a firm with over 500MW of data centre capacity under development or operation, SEGRO is tapping into expertise that enhances its ability to execute complex, high-demand projects.

What Makes Park Royal a Prime Location for Hyperscale Expansion?

Park Royal is one of London’s most sought-after industrial zones, strategically located within the city’s core Availability Zone. The area benefits from secured access to 70MVA of power, a crucial factor given the UK’s increasing energy constraints for data centre developments. Additionally, London remains one of Europe’s largest data centre markets, attracting hyperscale clients looking to expand their cloud computing infrastructure.

The site within SEGRO Park Premier Road was previously occupied by a warehouse but has now been earmarked for redevelopment into a high-capacity data centre. The location offers low latency connectivity, ideal for companies requiring real-time data processing capabilities. The joint venture anticipates strong demand from hyperscale cloud providers, given the scarcity of similar sites with both land and energy availability.

How Will the SEGRO-Pure DC Data Centre Prioritise Sustainability?

Sustainability is at the forefront of the project, aligning with SEGRO’s Mandatory Sustainability Policy and Pure DC’s Healthier Earth commitments. The data centre will integrate an advanced closed-loop liquid cooling system, designed to reduce its environmental footprint and minimise water consumption, a growing concern in data-intensive operations.

As digital infrastructure projects face increasing scrutiny over their energy consumption, both companies are committed to ensuring the facility meets the highest energy efficiency standards. SEGRO’s broader Responsible SEGRO framework emphasises investment in local communities, and this joint venture will contribute to environmental, employment, and educational initiatives aimed at fostering a skilled workforce in the technology sector.

What Impact Will the Joint Venture Have on the UK’s Digital Economy?

The project represents a major step in strengthening the UK’s digital infrastructure and underscores Britain’s attractiveness as a tech investment hub. Peter Kyle, the UK Secretary of State for Science, Innovation & Technology, welcomed the development, noting that private sector initiatives like this are essential for ensuring the country’s digital economy remains globally competitive.

Data centres have become critical to economic growth, supporting cloud computing, AI, and machine learning applications. This facility will help alleviate capacity constraints in one of Europe’s most in-demand data centre markets, ensuring that businesses relying on large-scale data processing can expand their operations within London.

Beyond infrastructure benefits, the project will generate hundreds of jobs during its multi-year construction phase, with long-term employment opportunities in data centre management and operations. A skills development programme is also planned to equip local workers with expertise in data infrastructure, energy management, and cloud computing, addressing the sector’s growing need for skilled professionals.

How Is This Deal Affecting SEGRO and Oaktree’s Market Performance?

The announcement has been met with optimism among investors, with SEGRO PLC (LSE: SGRO) rising 3.65% to 714.40p as of March 25, 2025. The stock is currently 8.37% above its 52-week low of 659.20p and remains a key player in the expanding industrial real estate sector. SEGRO’s annual dividend yield of 4.24% continues to appeal to income-focused investors, particularly as the company diversifies into high-growth digital assets.

Given SEGRO’s long-term strategy in data centre expansion, analysts suggest a “Hold” recommendation, with the potential for further gains as project milestones are achieved. Investors will be closely watching the leasing process, as a long-term agreement with a global hyperscaler would further solidify SEGRO’s position in the sector.

Oaktree Capital Group, the parent company of Pure DC, operates under Brookfield Asset Management and has limited publicly traded stock. However, its NYSE-listed preferred shares (OAK-PA), which closed at $22.35 with a 7.44% dividend yield, remain an attractive option for those seeking steady income from infrastructure investments. The stability of Oaktree’s financing model suggests a “Hold” recommendation for OAK-PA investors.

What’s Next for the SEGRO-Pure DC Data Centre?

The joint venture is already in motion, with site clearance and planning applications underway. The first phase of construction is expected to begin in 2026, with the data centre scheduled to be fully operational by 2029. The next critical milestone will be securing an anchor tenant, most likely a global hyperscale cloud provider, which will determine the project’s financial trajectory.

This initiative marks a pivotal moment in SEGRO’s evolution from industrial landlord to digital infrastructure player, a trend gaining momentum across the real estate sector. As London remains a strategic hub for data-driven industries, this project could set a precedent for future high-value data centre investments.