Newmark Launches Data Center and Digital Infrastructure Capital Markets Group

Newmark Group is expanding its capital markets interest further into alternative CRE assets with its new Data Center and Digital Infrastructure practice group. That’s not to be confused with the company’s Data Center Consulting practice, which focuses on data center strategies, valuation and advisory, management, evaluation and performance.

“The data center market has experienced remarkable growth and insatiable demand, and with advancements in generative AI and ML, this growth is expected to surpass the current estimated projection of a 10% compound annual growth rate (CAGR) through 2030, propelling the sector even further,” the company said.

In addition, data centers see high levels of obsolescence, as new technologies and equipment displace old ones and it may be easier to build a new facility than upgrade an existing one for compatibility.

For example, many AI applications require data centers with different cloud-computing frameworks than older technologies require.

As of a year ago there was record demand for data centers, with industrial owners and developers are partnering with experts to expand into area. Enterprises have been moving toward hosted cloud computing for a few reasons. It allows them to treat IT largely as an immediately deductible operating expense rather than as a depreciated capital expense, opening up faster tax breaks. Cloud computing in theory should allow rapid scaling up or down, enabling companies to obtain the amount of capacity they need at a given time rather than overbuilding. Also, pushing computing onto a cloud that supports many clients reduces IT staffing needs.

Finding space can be challenging because of power and cooling requirements, and things can get contentious. Amazon had a battle with NIMBY activists that ended in May 2023 when the company was able to move some hyperscale data center projects forward in Northern Virginia. Also in May, San Francisco-based Digital Realty filed plans to convert a five-story parking garage in downtown LA into a 13-story, 486K SF facility that will primarily be used as a data center. Global demand has only grown despite power limitations.

Newmark hired Brent Mayo as executive managing director for the practice group. Previously at DH Capital, he specializes in capital formation, financings, asset sales and platform advisory.

“Throughout his career, Mayo has been involved in some of the most significant data center and digital infrastructure deals in the last decade, including CyrusOne’s $16B sale to KKR and GIP, ODATA’s multibillion-dollar sale to Aligned Data Centers; AtlasEdge’s formation and subsequent acquisition of DataCenter One; and Data Foundry’s sale to Switch data centers,” the company said.