What are Commercial Investors Paying Attention To? Melbourne’s Data Centre Boom
Melbourne has rapidly become Australia’s leading hub for datacentres, overtaking Sydney in both market share and pipeline growth. As demand for digital infrastructure accelerates—driven by cloud services, AI and data-heavy technologies—datacentres are no longer an “alternative” investment. They’re fast becoming a cornerstone of commercial and industrial real estate portfolios.
In this article, we look at the trends shaping this high-growth sector, and why Melbourne is at the centre of it all.
1. Melbourne Leads the Nation in Data Centre Projects
According to a 2024 M3 Property report, Melbourne now accounts for nearly 75% of all new datacentre developments in Australia, with 183,000 sqm of data-related infrastructure under construction.
The city’s edge over Sydney is due in part to:
- Greater land availability in outer metro areas
- Easier access to scalable energy supply
- Strong government support for digital infrastructure
With this momentum, Melbourne’s datacentre market is projected to be Australia’s fastest growing over the next five years.
2. Investment Volumes and Yields Reflect Surging Demand
Datacentres are now one of the most sought-after commercial real estate assets in the country. In 2024 alone, over $13 billion was invested nationally in datacentre infrastructure, with average yields holding strong around 5%.
Global private equity firms, specialist REITs, and institutional investors are actively land banking strategic industrial parcels across Melbourne for future expansion.
3. From Alternative to Core Asset Class
Until recently, datacentres were seen as niche or specialised. But that’s changed. Real estate analysts now suggest datacentres will soon hold the same strategic value as office buildings or logistics warehouses in diversified property portfolios.
The typical site requirements—connectivity, energy, security—align perfectly with large industrial and fringe commercial zones, where adaptive reuse or greenfield builds are possible.
4. What’s Driving the Boom?
Several core trends are accelerating growth in Melbourne’s datacentre sector:
- Data demand: Explosive growth in storage and processing needs
- Cloud computing and AI adoption: Pushing infrastructure needs to new levels
- Proximity to fibre, power, and users: Melbourne offers all three
- Supportive planning framework: Government policy is enabling development
This convergence of tech, policy and infrastructure makes the city uniquely positioned for datacentre scalability.
5. Challenges and Considerations for Investors
Like any fast-growing sector, there are barriers to watch:
- Power supply constraints: Not all areas can support hyperscale demand
- Zoning and planning: Permissions for high-security, high-load uses can be complex
- Sustainability: Growing emphasis on energy efficiency and low-carbon operations
- Longer development timelines: Unlike spec industrial, datacentre projects are capital-intensive and more complex to deliver
Understanding these factors early is crucial for investors, developers and landowners entering the space.
Melbourne’s Digital Backbone Is Just Getting Started
Melbourne is already recognised as one of the world’s fastest-growing edge metros for datacentres, with capacity expected to reach 1 GW in the near future. Amazon’s planned $20 billion local investment between 2025 and 2029 will only accelerate the transformation.
For those in the commercial property sector, this isn’t a future trend—it’s a present reality with long-term potential.
Looking to explore Melbourne’s data centre investment landscape?
CPN Commercial Group offers expert guidance in identifying, marketing, and securing digital infrastructure-ready assets across key industrial and commercial zones.
