Data Centres in Melbourne: Popularity in Commercial and Industrial Real Estate 

Data centres in Melbourne have rapidly become a leading hub for server farms and cloud facilities. With the surging demand for digital infrastructure and AI-driven storage solutions, the landscape of commercial and industrial real estate is undergoing significant transformation. Investors, developers, and occupiers are adjusting their strategies to capture this growth.

Melbourne now leads new digital infrastructure projects in Australia, accounting for nearly 75% of all developments currently under construction, according to a 2024 M3 Property report. Of the 183,000 square metres of data facility projects nationwide, Melbourne holds the largest share. Consequently, the city’s industrial data hubs are expected to grow the fastest in Australia over the next five years. Developers are actively seeking available land and reliable energy supply to support this expansion.

Key Trends in Melbourne Data Centres

Data centres in Melbourne have attracted significant attention due to rapid growth and market share. According to Property Observer, Melbourne dominates new data centre projects, reflecting strong local and international investor interest. Furthermore, Melbourne’s digital infrastructure is increasingly viewed as a core component of commercial and industrial real estate. Investors now consider server farms and cloud data hubs essential assets rather than alternatives.

Investment Activity in Melbourne Server Farms

Investors now consider server farms among the most attractive asset classes in commercial real estate. In 2024, the sector attracted over $13 billion in investment nationally, with yields around 5%. International institutional investors, private equity firms, and specialist REITs are key players in Melbourne. Many engage in land banking to secure prime sites for future growth.

From Alternative to Core Digital Infrastructure

Digital infrastructure hubs are no longer alternative assets. Experts predict that these facilities will be as essential as office or logistics properties within a decade. The average size of land used by cloud data facilities is increasing. Consequently, analysts expect the sector to double its built-out capacity in Australia over the next ten years, with Melbourne’s share growing significantly.

Drivers of Growth for Melbourne Cloud Data Facilities

Several factors drive this expansion:

• Explosive growth in data generation and storage needs

• The rise of cloud computing and AI

• Proximity to fibre networks , power, and urban centres

• Government support and favourable regulations

For example, Melbourne’s planning policies support digital infrastructure investment, attracting both local and international developers.

Challenges for Industrial Data Hubs

However, growth faces a few hurdles. Access to power, suitable land, and planning regulations remain key constraints. Developers increasingly focus on sustainability, energy efficiency, and risk management. Additionally, industrial data hub development differs from traditional commercial real estate. Projects require longer timelines and specific needs for connectivity, security, and redundancy.

Major Data Centre Projects and Operators in Melbourne

Industry Outlook

Melbourne’s cloud and digital infrastructure sector is set to expand rapidly. The city ranks as the fastest-growing “edge metro” globally, with capacity expected to approach 1 GW soon. Major tech companies and hyperscalers are driving demand. Furthermore, Amazon’s $20 billion investment from 2025 to 2029 will accelerate growth in commercial and industrial real estate linked to data hubs.

Conclusion

Melbourne’s data centre boom is transforming commercial and industrial real estate. With a strong project pipeline, robust investment, and increasing strategic importance, server farms and digital infrastructure hubs now form core pillars of the city’s real estate market.