Data Centre Procurement: Key Trends and Considerations

In collaboration with FTI Consulting, we take a closer look at some of the major themes shaping the way data centres are being procured and delivered.

Securing Power

Today’s data centres demand far higher power density per rack compared to older facilities, driven by the computational intensity of modern applications. Ensuring reliable and sufficient electricity is therefore one of the most pressing challenges. Where local grid capacity or infrastructure is lacking, developers are increasingly investing in self-generation — deploying solar PV, wind and gas turbines, battery storage, and other on-site solutions.

In cases where a new substation is required, specialist contractors are typically engaged under separate contracts, creating interface and sequencing risks that must be managed. Looking ahead, small modular reactors may become a viable solution to meet escalating demand for localised power.

Operators are also adopting layered energy strategies — blending renewables, storage, and third-party offtake arrangements — to manage price volatility and monetise surplus capacity. On-site generation (such as solar or wind) combined with batteries supports peak shaving and access to ancillary service revenues, while corporate PPAs and financial hedging instruments are increasingly used where full self-generation is not feasible. Regulators in countries such as the UK and Germany are prioritising grid upgrades to accommodate the rapid expansion of data-centre projects.

Cooling and Technology Cycles

With IT hardware evolving at pace, there is a real risk that equipment specifications may become outdated before a facility is even completed. Developers can mitigate this by adopting modular designs, careful procurement planning, and models where tenants provide their own computing equipment.

Rising power density also brings a heat challenge. Advanced liquid cooling technologies — including direct-to-chip and immersion cooling — are becoming more common to maintain performance. These systems demand sophisticated power and monitoring solutions, adding further complexity to design, commissioning, and operation.

Managing Design Change

Data centres are highly specialised and design changes are inevitable as projects progress. Additional functionality, evolving requirements, or design errors can all require rework or approvals. It is therefore critical that contracts address variations clearly, reducing the risk of disputes later. While build-to-suit projects benefit from early tenant involvement, colocation schemes face greater risk where end-user input is limited.

Supply Chain Pressures

The supply of specialist equipment, skilled labour, and materials is under strain due to booming demand and global disruption. Electrical and HVAC installations are particularly affected. To avoid project delays, procurement strategies should anticipate these challenges and build realistic lead times into development schedules.

Modular and Vertical Construction

Prefabricated modular solutions are gaining traction, enabling flexibility and faster adaptation to emerging technologies. However, issues around integration, advance payments, and financing must be carefully managed. Early engagement with lenders and stakeholders is essential when significant modular elements are involved.

In high-value or land-constrained locations, multi-storey data centres are becoming increasingly attractive, despite higher upfront costs. These vertical builds introduce challenges around rights of light, environmental concerns, and the need for specialised structural solutions.

Parcelisation and Financing

Breaking a campus into smaller, self-contained parcels can help manage capital outlay and financing. This allows staged development aligned with leasing, diversified funding sources, and parcel-specific loan structures — offering flexibility for both developers and lenders.

Regulation and Sustainability

The regulatory landscape is evolving quickly. At the EU level, the recast Energy Efficiency Directive now requires annual reporting on energy and water metrics for centres above 500kW IT load, with future rules likely to mandate technology benchmarks. In the UK, new disclosure regimes will increase transparency but may also accelerate investment in lower-carbon projects. While some rules may restrict expansion in saturated grids, they also create opportunities for energy-efficient and renewably powered developments.

At JM, we not only monitor the evolving legal and commercial issues impacting the data centre sector — we have hands-on experience in delivering complex data centre asset acquisitions and sales. Our team advises developers, investors, and operators on structuring, negotiating, and completing transactions across this rapidly growing asset class, ensuring that procurement, regulatory, and operational risks are addressed from the outset.