BlackRock Invests £500M in UK Data Centres: Preparing for Future Demand

BlackRock Inc. plans to pour as much as £500 million ($678 million) into an overlooked corner of Britain’s data center market. This commitment was unveiled as Chief Executive Officer Larry Fink prepares to join US President Donald Trump on his state visit to the UK.

The asset manager has acquired a site in west London that will seed a new venture with data center operator Gravity Edge, according to a statement. The so-called Digital Gravity Partners venture will seek to buy existing data centers with underutilized capacity. BlackRock’s global co-head of real estate, Thomas Mueller-Borja, shared these details in an interview.

The world’s biggest investors are piling into data centers, betting that the rapid growth and adoption of AI will lead to a corresponding boom in demand for the infrastructure required to power it. This trend has prompted several of the world’s biggest alternative asset managers to aggressively pursue vast new facilities to meet the demands of hyper scalers like Amazon.com Inc.’s AWS, Microsoft Corp., and Alphabet Inc.’s Google.

However, electricity costs in the UK are among the highest in Europe, and the country’s power grid is struggling to keep up with demand. “We are trying to find existing assets that are underutilized but have power,” Mueller-Borja said. “We aren’t doing ground-up development for hyper scalers.”

The initial investment of more than £100 million is being made from BlackRock’s €1.2 billion Europe Property Fund VI, which the asset manager completed raising in July. Investing in smaller facilities servicing enterprise customers will also increase the audience of potential buyers to whom BlackRock can sell the upgraded properties, in contrast to the vast developments targeting hyper scalers that often require billions in capital expenditure.

“We are always really focused on exit liquidity,” said Paul Tebbit, BlackRock’s other co-head of real estate. “One of the attractive things about this strategy, given the lot sizes we are creating, we can see real estate funds or infrastructure funds being the end buyer.”

BlackRock boss Fink is among a handful of Wall Street titans and Silicon Valley executives joining Trump on a state visit to the UK this week, where they will unveil billions in cross-border investment. Sky News earlier reported on BlackRock’s plans. Bloomberg also covered the story.