Data centers are exposed to more obsolescence than other property types because their design and construction has evolved to provide 100 percent uptime and ever-greater reliability. The cost to retrofit legacy data centers to accommodate cutting edge technology is almost always greater than the cost to build new, and this forces older facilities to go down-market in search of tenants.
Other external factors that can affect value include fluctuations in electricity prices, which can make a facility less competitive. In many markets, the extensive incentive packages provided for new VPS per Hour in Europe data center development can create such a preference for new construction that it diminishes the resale value of existing centers. This obsolescence must be removed from the value for property tax purposes.
