When it comes to real estate valuations, data centers aren’t like other buildings. Miles Loo learned this in the late 1990s while appraising the value of an office tower in Los Angeles that had been converted into a “carrier hotel” to support telecom and Internet traffic.
Loo specialized in appraising Class A office buildings, including many trophy properties in the LA market. But this property was different, with unusual levels of connectivity and redundant power infrastructure. Loo realized that many of the factors that made the building valuable weren’t accounted for in the traditional office appraisal model.
It was the beginning of a career specializing in data center appraisals, founding the Mission Critical Facilities specialty group at Cushman & Wakefield and helping to define valuations as the sector emerged as an established real estate asset class.
Loo has now joined Newmark Knight Frank (NKF) as an executive vice president leading its Valuation & Advisory Data Center Solutions Group. Loo and his team will be based in the Los Angeles office, working on projects globally.
“Miles was keen to recognize the tremendous shift in how data centers have been utilized early in his career,” said John Busi, President, Valuation & Advisory at NKF. “As one of the industry’s leading authorities on data centers, Miles’ contribution to NKF will transcend geographic and service-line borders, and will elevate the firm’s position in this incredibly important asset sector.”
M&A Highlights Importance of Valuations
Appraisals are important to investors in the data center space, and are often updated each time a building is being sold or recapitalized. The business has always been steady, but has grown during the wave of mergers and acquisitions over the past several years. There have been more than 25 significant acquisitions of companies or facilities this year. Investor interest in data centers has prompted many other assets to be placed on the market.
All of this activity generates work for appraisers in the data center industry. While Loo was the first to build a specialized data center appraisal practice at Cushman & Wakefield, other real estate firms have since launched valuation services. But none have the track record of Loo, who has appraised more than 25 million square feet of technical/raised floor space in his global travels.
Loo is a familiar face to many on the data center conference circuit, as he regularly moderates panels of CEOs for the CAPRE Data Center Summits and IMN conference series. Loo’s experience includes advising private equity funds, institutional investors, large pension funds, major Fortune 500 companies, cloud companies, and global IT conglomerates on their data center investments.
That expertise spans the range of facilities found in the mission-critical world – enterprise data centers, colocation facilities, disaster recovery centers, carrier hotels and life sciences properties across the world.
Complexity in Facilities, Metrics
At first, the variety of data centers was challenging. “It was a constant learning process,” said Loo. “It wasn’t until I’d seen every variation of a data center or carrier hotel that I felt comfortable, and it took years.”
The metrics for appraising data center space have also evolved. Buildings were originally appraised in dollars per square foot (SF). At various times in his career, Loo said, data center valuation standards have focused on dollars per rentable SF or dollars per SF of raised floor, but are now expressed in dollars per kilowatt of power.
Newmark Knight Frank is part of BGC partners, a technology-driven global brokerage company. Loo and his team will be based in the Los Angeles office, working on projects globally.
“NFK’s global reach will allow us to build our Valuation & Advisory Data Center Solutions Group exponentially, and will provide me and my team the scope to accommodate our clients worldwide,” said Loo.