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Why Technology is Redefining Real Estate

Andrea Chegut

Visiting PhD StudenT
PhD Candidate at Maastricht University

Executive Summary

The growing demand for BIG data on the telecommunications infrastructure creates an innovative reconfiguration of the office and industrial buildings of the past, transforming traditional infrastructures to support the fiber-optic network and the growing array of data centers linked to it. This paper investigates the financial performance of commercial real estate linked to the fiber-optic network and data centers. I use a unique panel data set of fiber-optic connectivity, data center development and commercial real estate transaction data for the New York Core Based Statistical Area over the 2007 to 2013(Q1) period. Data centers transact at a 33.9 percent premium compared to the market and buildings with the most advanced fiber-optic connectivity transact for 30.8 percent more than their non-fiber-lit peers. Compared to fiber-lit buildings, however, data centers only earn premiums in the beginning of the sample period. The premiums reported are important for the acquisition of future data centers and capital expenditures in fiber-optic networks in the commercial real estate sector. More importantly, urban and rural planners will need to consider the future mix of digitally occupied spaces in the greater urban framework

GeoTel Infographic Andrea Chegut.