What is the typical net operating income (NOI) margin in data centers?

The typical net operating income (NOI) margin for data centers is generally found to be within the range of 55-65%. This level of NOI margin reflects the unique operational characteristics and high demand for data centers in the current market.

Data centers require significant investment in infrastructure, energy efficiency, and technology to maintain reliability and performance. This results in higher operational costs compared to traditional real estate assets. However, due to increasing demand for data storage and processing driven by technological advancements, the revenues generated from data centers can be substantial. A 55-65% NOI margin indicates that, despite their operational costs, data centers are able to achieve healthy profitability. This range positions them favorably when compared to other real estate sectors, emphasizing their strong income potential and the efficiency of their operations.

Understanding the factors that contribute to this margin is crucial for investors and analysts in real estate finance, as they evaluate the potential risk and return associated with investing in data centers.