Data Center Investing - Too niche or gig with solid career mobility?
Got approached by a recruiter out of the blue about this opportunity.
Investing in data centers seems a little niche, what kind of career options does one have after doing this?
My current gig: A dead-end gig with nil exit opps. The last thing I want is to hop from one dead-end gig to another.
Thanks!
Data Centers are super super interesting. Given all this talk about the demise of office, retail, etc. I think this will continue to grow as an attractive asset class/product type. You get a bit of typical real estate exposure but also a ton of specific data center lingo and knowledge. A lot of institutional firms have already begun investing in this space and many more are trying to figure it out enough to get in. I’m not one for specialization into something that niche but recognize it could be a really good opportunity and timing to go in and become an expert early in the game.
Not sure what investing in this case means, but there are some very large REITS that develop and run data centers all over the country/world. Working there is very similar to industrial, except more technically complex, cash intense, and and requires a high level of ongoing operational fluency.
Without more info about the role/company I would say data centers (in general) are not a dead end. There might be a market supply/demand equilibrium in development at some point but assets could still trade hands after that. It may be more technically nuanced that MF investing but imagine there are exit ops from the asset class itself, depending on the role. Admittedly don't know a lot about them but interested in subsequent posts.
OP, can you provide more insight into the role and what you want to do with your career?
I am currently working within a Fund of Funds at an asset manager. This next step would require me to take a pay cut cause clearly FoF guys don't have the technical skillsets for a role like this.
In terms of clarity on the role, unfortunately, I do not have more details because the recruiter doesn't know more than what she told me. Basically, he said they (1) invest in data centers (2) develop it themselves.
Just wondering, do you have a sense of what the working hours are like typically?
Thanks.
why do you say it with certainty you'd be taking a pay cut? generally not a proponent of taking a pay cut but if you're truly in a dead-end job and this new gig will reset you, could be worth considering. but, a new company should pay you what you're worth.
i can't comment on the hours, totally firm dependent, market, and responsibility dependent. i don't even think the recruiter has given you enough information to know for sure.
Be wary of recruiter as well here. I don’t mean to burst your bubble and hope you get the gig if you want it, but FoF guys typically get passed over for the exact reason you mentioned. They lack the technical skill set. Is that something they are willing to teach? Highly likely there is a pipeline of people who would be plug and play.
Just something to think about as you have conversations with recruiter.
data centers are growing in demand, so that specialty is likely grow as well and thus demand for professionals who know what they are doing. It really a form of specialized industrial/semi-office property, so I think you would be fine in being mobile based on your general skills. Given what you said about current role, I would have no hesitation considering a move like this.
Thanks, yeah I am leaning towards going for it. Just wondering, do you have a sense of what the working hours are like typically?
I don't think you gave enough info on the firm to give any sense of hours/work balance, etc. Property type rarely sets those conditions, its the nature of the firm (structure, strategy, means of financing/capital raising, deal velocity, etc.). So, if you want to describe those items, people here may be able to give you a better idea, but data centers alone doesn't give me any more clues personally.
niche is not a bad thing
Agreed, nobody gets rich being a generalist.
From a tech perspective, the “cloud” is only growing. The race to catch up to AWS, mainly between GCP and Azure, then the other ones (Oracle, IBM, HashiCorp, etc) to not get left behind in the dust is intense.
The cloud sounds fancy and high technical. While it is in some regards, it’s essentially a bunch of servers inside a building and or basement. That’s it. I don’t know the first thing about the requirements for housing these servers or databases, other than they get really hot so there’s a lot of effort into cooling them down. I’m sure there’s more to it than that. But essentially when someone talks about cloud- as a RE guy just read “building to hold a ton of rack mounted servers”.
These buildings with all this server and database power need to be in key locations. It makes sense, if my server is in Ohio but my users are in London, they’re gonna experience slower response times with my website. Getting data from Ohio to London takes time, in computing 1.5 seconds might as well be 1.5 years. So I need servers near London. As more people get access to the internet, more servers are needed to handle the traffic.
I find this stuff fascinating, I’m working towards my second AWS Certificate right now and I’m working with AWS on my job.
From a tech perspective, the “cloud” is only growing. The race to catch up to AWS, mainly between GCP and Azure, then the other ones (Oracle, IBM, HashiCorp, etc) to not get left behind in the dust is intense.
The cloud sounds fancy and high technical. While it is in some regards, it’s essentially a bunch of servers inside a building and or basement. That’s it. I don’t know the first thing about the requirements for housing these servers or databases, other than they get really hot so there’s a lot of effort into cooling them down. I’m sure there’s more to it than that. But essentially when someone talks about cloud- as a RE guy just read “building to hold a ton of rack mounted servers”.
These buildings with all this server and database power need to be in key locations. It makes sense, if my server is in Ohio but my users are in London, they’re gonna experience slower response times with my website. Getting data from Ohio to London takes time, in computing 1.5 seconds might as well be 1.5 years. So I need servers near London. As more people get access to the internet, more servers are needed to handle the traffic.
I find this stuff fascinating, I’m working towards my second AWS Certificate right now and I’m working with AWS on my job.
Great info. Could you share a bit more about the AWS certificate you’re working towards? Who’s it geared towards and what sort of things are you learning/finding useful?
I'm a software engineer, so these certificates pertain more towards engineering than real estate. If you are curious though- the AWS Certified Cloud Practitioner is the one I have, I'm studying for the Solutions Architect- Associate certificate. It's really geared towards how developers use AWS, getting familiar with their products, and how to build out custom solutions. Let me find a good resource for explaining the cloud from a practical perspective, rather than through the lens of an engineer.
Edit: Also, I find the business logic/ history of AWS to help with understanding what it does. The TLDR: Amazon needs a ton of compute power to manage the billions sold on Black Friday/ Cyber Monday and the general holiday season. But then that dies down. They're stuck with these servers, it's not like you just return it to the store then buy it back before holiday season. It's sitting there, underutilized. They have a brilliant idea to let other companies rent their servers. So I build my own startup, I don't want to sink $30k into servers and place all that risk on myself. I rent out Amazon's server and pay them monthly, allowing me to get some cash flow going for myself and not sink a huge cost. My business product gets retweeted by Kanye and Kim? Cool- I just rent more servers from Amazon to handle the increase. Ye suddenly flips and says my business is garbage, I just lower the amount of servers I rent. For Amazon- they get cash flow (btw AWS, the cloud division of Amazon, accounts for 2/3 of the profits), instead of having them collect dust. There are other services too, a LOT more. But that's the basic idea.
Thanks this surely sounds interesting.
I was offered a job a while back with a tech company that was buying up properties for the purpose of growing their data centers. I do think data centers are obviously growing with how much of our data storage is moving towards the cloud, so I can see it less of a dead-end in the long-run. I've heard of some REITs like Digital Realty compete in this space, so there's definitely value there. I, however, did not end up taking the offer mostly due to the culture of the firm itself and the fact that the role was more of a corporate real estate focus. They were strictly just dumping cash into property to hedge against inflation with rent. No metrics were considered, even if they lost money they didn't care.
Data centers are fascinating with what their doing with repurposing of empty boxes in cities all over the country. I would take it if ur in what you take to be a dead end
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