Europe’s data economy is expanding faster than the physical infrastructure built to support it. In Germany this pressure is pushing one of the country’s largest listed landlords, Aroundtown, into a new strategic direction. After years of relying on offices, hotels and residential assets, the company is now moving into digital infrastructure. According to the latest disclosures, Aroundtown expects its first German data centre in Berlin to go live within three years, pointing to a launch window around 2028.
The plan marks a structural shift: instead of waiting for office demand to recover, the company is positioning itself at the centre of Germany’s growing need for AI-ready, power-intensive facilities.
Why Offices No Longer Work the Way They Used To
Aroundtown’s pivot reflects the reality of Germany’s post-pandemic office market. Hybrid work has softened demand, especially in buildings without top ESG credentials or flexible layouts. Berlin’s vacancy rate has climbed to 8–10 percent, equivalent to more than 1.8–2.1 million square metres of empty space across the city. Prime locations continue to attract tenants, but the middle of the market has weakened significantly.
Prime office rents in Berlin’s CBD remain close to €46–46.50 per square metre per month, while broader market levels sit nearer €25 per square metre per month. The spread reveals a growing divide between high-quality assets and older stock becoming increasingly difficult to lease.
For landlords with thousands of square metres of vacant or underperforming offices, that imbalance is a strategic challenge. Aroundtown’s response has been to repurpose buildings that traditional tenants no longer want. The company is already converting part of its portfolio into serviced apartments, due to open in 2026. Data centres are the next, and much larger, step.
The Berlin Strategy: Grid Approvals Come First
The decisive moment came in mid-2025 when Aroundtown confirmed it had begun exploring the conversion of offices into data centres. By late summer the company had secured initial grid capacity allocations for several Berlin locations — a crucial milestone in a sector where access to power is more valuable than the real estate itself.
In November management announced that ten buildings across Germany have been identified as potential data centre sites, six Berlin projects already hold initial energy approvals, and the first Berlin data centre should be operational within three years. This timeline points to 2028, though the company stresses that the schedule depends on securing full power contracts and completing technical conversion works.
Aroundtown’s capital markets chief, Timothy Wright, has repeatedly underlined that grid access is the new bottleneck. Unlike conventional office fit-outs, data centres require a guaranteed power supply, redundancy, cooling and connectivity. Projects cannot proceed until utilities confirm capacity — a process often more complex than construction itself.
The Economics: High Capex but Transformational Returns
Aroundtown has not disclosed specific budgets for each facility. However, industry benchmarks put data centre construction costs at €6.6–12.1 million per MW of IT load. A 20 MW project — a scale attributed to one Frankfurt conversion under review — would therefore require a €130–240 million investment.
Revenues, however, operate on a different level compared to offices. Wholesale colocation rents in Germany range from €180 to €300 per kW per month. A 10 MW facility could generate €22–36 million per year and a 20 MW asset could approach €44–72 million annually, depending on tenant mix and uptime standards. Even accounting for operating costs, the value uplift compared to office rents is substantial.
Europe’s Power Problem: The Real Barrier to Growth
Germany expects data centre capacity to double by 2030, yet the country faces rising concerns over electricity supply. The Federal Network Agency has warned that demand from AI computing, cloud services and electric vehicles could outpace the expansion of renewable energy and flexible gas backup.
In cities like Frankfurt and Amsterdam, waiting lists for new power connections already stretch into years. Substations and transformers take time to build, environmental approvals are strict and municipalities increasingly require waste-heat recovery from data centres into district heating networks.
Under Germany’s and the EU’s evolving regulatory framework, data centres must already use at least 50 percent renewable electricity, rising toward 100 percent by 2027. This forces operators to sign long-term green PPAs, adding another layer of complexity. For Aroundtown the early grid approvals in Berlin are therefore not just formalities. They are the foundation of the business case.
What This Means for Berlin’s Office Market
Berlin’s office sector continues to face a soft patch. Take-up remains below pre-pandemic averages, vacancy is climbing and older buildings struggle to attract tenants even at discounted rents. Analysts expect vacancy to reach 11 percent if new supply arrives faster than demand recovers.
Against this backdrop, converting obsolete offices into data centres could have noticeable effects. Buildings unsuitable for modern office tenants — because of low ceilings, limited daylight or outdated systems — may work better as technical infrastructure. Though conversions are expensive, they can turn a vacant property into a long-duration, infrastructure-grade income stream. If digital infrastructure outbids traditional tenants for space, some submarkets could see upward pressure on land values. At the same time municipalities will need to balance economic benefits with concerns about energy use, heat generation and generator noise, prompting stricter design standards and heat-reuse requirements.
Will Aroundtown Keep or Sell?
Management has left both exit paths open. If full approvals are secured, Aroundtown can choose to hold and operate the facilities with a specialist partner or sell shovel-ready, fully permitted projects to infrastructure funds at a premium. Given the company’s leverage and the interest-rate environment, analysts expect a mixed strategy: retaining selected projects in Berlin and Frankfurt while selling others to strengthen the balance sheet.
Final Perspective
Aroundtown’s decision to launch its first Berlin data centre by 2028 signals a major shift in Germany’s real estate landscape. The move is defensive, addressing high office vacancies, and opportunistic, tapping into one of Europe’s fastest-growing asset classes. If power approvals continue to progress, the company could transform parts of its portfolio from struggling office blocks into high-value digital infrastructure.
For Germany this is part of a broader story: cities are no longer competing for corporate headquarters but for megawatts, cooling capacity and fibre networks. The landlords that secure those building blocks early will shape the infrastructure behind Europe’s AI and cloud expansion for the next decade.
