Most people have heard data centres categorised as ‘big sheds’. But, that description starts to fall flat once the building has lifts. London has been living with multi-storey data centres for years. Telehouse’s 11 storey North Two centre launched its first phase in 2016. More recently, Telehouse has broken ground on its West Two centre (a nine-storey development), Vantage’s Park Royal scheme has been delivered as a six-storey facility, and Colt’s London 4 plans at Hayes are clearly multi-storey too.

Why data centres are going vertical

So, why go vertical? Some types of data centre work can move out to cheaper land, closer to larger power sources, with relatively little impact on the end user. On the flipside, other demand is less mobile. It’s tied to dense networks and to customers that care about response times, not just total capacity. That’s one reason the UK data centre market has historically clustered in a small number of regions (predominantly the Greater London area, with Manchester as a secondary cluster). London’s concentration has been driven, in part, by low latency transactions at scale in banking and finance.

Where real estate law meets real operational risk

None of this is conceptually new to real estate. Tall residential and office buildings with mechanical and electrical plants, risers, roof rights, servicing routes and more complicated management arrangements are very common. For a vertical data centre, those familiar issues have unusually direct operational consequences. 

For vertical centre contracts, a few distinct pressure-points appear:

Power, fibre and cooling have to travel up the building

The documents need to say, clearly, what routes are granted, which parts are exclusive, what access is permitted, and how future upgrades are handled without turning every change into a dispute. A right to use a riser is not the same thing as a right to increase capacity.

The roof is working space

On paper it is easy to grant 'rights to use the roof'. In practice, rooftop plants need replacement, screening changes, and occasional heavy lifts. Landlord reservations also need to be carefully considered. A retained right that would be harmless on an office block can be an operational constraint on a live data centre.

Demise and control need an operating model

We’re also starting to see data centres appear as components within wider mixed-use schemes, which makes the common parts and shared-systems drafting more than just standard lease mechanics. If the landlord retains cores, lifts, yards, compounds or plant rooms, the lease has to describe how day to day control works: security, deliveries, testing regimes, emergency access, and the inevitable ‘out of hours’ events. In a 24/7, time critical environment, small delays become big problems.  

Alterations and reinstatement clauses need to be fit for purpose 

For a tall data centre, ‘alterations’ often mean major engineering work. Clauses borrowed from standard office forms won’t be entirely suitable.

These buildings aren’t novel in engineering terms. The real estate sector has worked with tall, service intensive buildings for decades. What’s different is how little tolerance a live data centre has for ambiguity.

Clear rights, fewer arguments: The goal of vertical data centre leasing

The real question isn’t whether the building works on day one. It’s whether it still works after the third plant replacement, the first capacity increase and the first operational incident that happens at 2am.

At the end of the day the aim is to make the asset boring to run and boring to trade. Clear vertical rights, clear retained parts, a workable access and replacement regime, and an alterations framework that anticipates upgrades rather than panics about them. If you get that right, the exit, the next expansion, or the refinance will merely be a document exercise rather than a full-fledged argument about what everyone thought they were getting.

To find out how our real estate team can help you navigate the legal complexities of data centre developments, please get in touch.