Data Centres
The role of data centres
Data centres have become the backbone of the modern digital economy, underpinning everything from cloud computing and artificial intelligence to financial services and government infrastructure. Their criticality lies in their role as the physical infrastructure that stores, processes, and distributes vast volumes of data in real time.
The increase in demand is unprecedented, largely driven by a few key factors:
There is currently an “AI gold rush”. New AI products are coming to market continuously, whilst existing products are being retrofitted with AI capabilities.
Agentic AI is now starting to enhance executing workflows in a way that GenAI has done for creating content.
However, AI is incredibly data centre resource-heavy and the AI boom has driven unprecedented demand for computing power. Agentic AI relies on good, clean data. This is leading to the replication of data sets into one new repository – leading to even greater need for data centre resources.
Cloud adoption has risen in recent years more than expected.
Consumers now receive much of their television, music and video gaming content streamed over the internet. They no longer store their data locally but instead use cloud services to hold their data online, (often unintentionally) multiple times over.
Businesses are increasingly moving away from on-prem solutions, favouring constantly improving and evolving cloud solutions. The breadth of the capabilities of solutions available to them is ever expanding and it is increasingly easy to integrate cloud systems.
The number of IoT (the Internet of Things) devices is estimated to have already almost reached 20 billion, but is set to expand exponentially. All these devices are creating an ever larger quantity of data needing to be processed and stored.
The growth in data centres
Global investment in data centres reached $57 billion in 2024 alone. In the UK, government strategy is also playing a pivotal role. The UK has plans to bolster AI infrastructure through initiatives like AI Growth Zones and the development of a National Data Library. These efforts aim to ensure that the UK remains competitive in the global AI race by investing in high-performance computing and expanding data centre capacity.
However, the sector is grappling with power constraints, rising construction costs, and community resistance, particularly in high-demand regions – and these pressures are prompting developers to explore new financing models and more sustainable, community-friendly designs.
Data centres require multifaceted legal, regulatory, and operational support due to the complex interplay of real estate, infrastructure, construction, connectivity, environmental compliance, utilities, and service-level contracts – and that is where our data centre team are ideally placed to support you.
Key contacts
Our data centre experience
Freeths has a long-standing track record of advising data centre operators, developers, occupiers, and investors, as well as those contracting to take halls, racks or space generally in data centres.
Our team has acted on some of the most complex data centre transactions and infrastructure projects in the UK.
This includes working on projects involving:
- Microsoft Azure
- AWS
- Experian
- Team Blue
How our specialist Data Centre team can support
Our specialists have the capability and expertise to deliver legal solutions across the full lifecycle of a data centre, from acquisition and construction through to leasing, operational management, and divestment.
We combine legal precision with commercial pragmatism to help clients navigate the challenges of delivering resilient, future-ready data infrastructure, as well as managing any disputes which may arise.
Our expertise
Utility provision
- Green energy procurement
- Heat recovery and heat networks
- On-site renewable generation
- Uninterruptible power supplies, on-site energy storage
The energy challenge
As data centres are online 24/7, they have a need for reliable and consistent power. This means electricity procurement strategies are key for data centre operators. Our specialist Energy team has deep expertise in advising on power procurement structures (including grid supplies as well as private wire, sleeved, and virtual power purchase agreements), on-site renewable energy solutions, and conversion of existing electricity generation and storage sites to data centres.
Data centres also require significant cooling and produce considerable volumes of effluent heat. Our dedicated Heat Networks specialists have experience of advising on heat recovery projects, and advising new-build industrial projects (such as data centres) on establishing heating and cooling frameworks. These types of projects can help solve key problems for data centre operators, whilst also providing an additional revenue stream.
We advise on a wide range of operational and maintenance contracts, and we are very experienced contract negotiators.
Technology:
Our IT lawyers have led negotiations for some of the largest and most complicated IT projects ever undertaken, as well as working on extremely innovative technology projects. Our IT specialists advise regularly on:
- data centre/hosting contracts
- VAR (value added reseller) agreements
- IT support and maintenance
- connectivity contracts (WAN, LAN, internet, WiFi)
- IT outsourcing
- multi-sourcing
- IT managed services arrangements
We regularly work with clients developing new technologies and partnering with third parties, supporting them with:
- registering and protecting all types of intellectual property rights (including patents and trade marks)
- partnering and joint venture agreements
General Commercial contracts expertise
As well as expertise in negotiating goods and services contracts, we have experience of assisting property owner with facilities management contracts and data centre specific arrangements which typically include the full range of services required by a property owner - security, cleaning, catering, maintenance both planned and reactive, either delivered by different service providers or as part of an outsourced service management contract that delivers all of the required services.
Businesses work with us because we pride ourselves in not only delivering technical legal advice but also recognising the importance of understanding their business, the sector in which they operate and the challenges they face on a day-to-day basis.
We advise landowner and developer clients on the acquisition and disposal of data centre projects including site and title due diligence, and drafting and negotiating options to purchase and ancillary grid and data easements and wayleaves, and ancillary working include telecoms code agreements, operator leases, DNO substation leases, etc.
We also support with commercial heads of terms and bespoke transfer provisions including restrictive covenants, easements, deferred consideration and overage and can advise on all stages of the project from site assembly to construction and operation through to decommissioning, and disposal at any stage in the project.
We also advise on:
- Construction
- Financing
- Tax structuring
- Risk and dispute management
- Planning and consenting
Integrated
We are an integrated nationwide team offering the complete range of services needed for transactions of all sizes. As a result, we can advise on all aspects of your project and are experienced in coordinating the input of lawyers to provide our clients with an integrated service.
Strength & Depth
We have the strength and depth of resource, market knowledge and expertise required to bring projects to a close. Our team members have top level experience of advising on infrastructure and major projects, with many of our lawyers having joined us from Magic Circle and other City firms.
Deliverability
Our team members have great legal skill with the ability to deliver complex projects involving multi-disciplinary teams both efficiently and cost effectively.
Commercial
You can trust us to be commercially-minded, readily accessible and available to provide clear solutions.
Notable work
- Advice on the leasing of several purpose-built data centre sites and the subsequent sub-lease of parts of these sites to “blue chip” multinationals as part of complex service level agreements
- Acting on the acquisition of a 19-acre site and the subsequent development of a large data centre (with c.9,000m² of server space) and the granting of sub-lease interests/licences to occupy
- Advice on two strategic 10-year services agreements for the provision of secure data centre spaces and services across multiple sites
- Advice on a 10+ year agreement for the provision of data centre services to a leading US service provider
- Supporting an international IT procurement and services company with its contractual arrangements for the provision of a 7 year, £50m IT transformation service to a healthcare customer, including:
- the transfer of a data centre to the client
- the ongoing provision of IT managed services, including data centre, application support, cross functional services, end user compute
- Supporting a global internet services company on its acquisition of a data centre provider
- Supporting a substantial data centre provider in the potential closure of a data centre site and the options to move or otherwise terminate existing tenants of the data centre
- Acted for a data centre provider on various facilities to fund the purchase of a data centre in Slough, the refinance of data centres in Enfield and Slough, and the development of a new data centre site
- Acted for a data centre provider in relation to a facility to fund the development of a data centre campus in Harlow
- Acted for a public sector body in relation to a loan to fund the development of a data centre in Gloucester
- Advising a data centre provider in relation to the contracts for the construction of a major data centre just outside London, including:
- Consultant Appointments
- Building Contract
- MEP Services Contract
- Extensions to those contracts
- Associated warranties and guarantees
- Advising on the design and construction of a £400m data centre in England (largest at the time of its construction)
- Advising a global data centre provider in relation to various construction-related contracts for a number of sites, including a mixture of JCT and MF/1 contracts, professional appointments, bonds and guarantees
- Advising on the conversion of energy storage / generation sites to data centres
- Advising on the co-location of data centres with renewable energy generation and energy storage assets
- Advising on the procurement of green energy, green certificates and other energy services for major energy users
- Advising a renewable energy aggregator on a portfolio sleeving arrangement for delivering electricity to a data centre in the South of England for one of the world’s largest data management and data centre companies
Testimonials
"They are very personable and always available at short notice. All deliverables and support are of high quality and performed efficiently."
Chambers & Partners, 2024
"Freeths take a pragmatic approach, delivering strong legal support balanced with the technical and commercial considerations of our industry."
The Legal 500, 2023
Meet our team
Chris Holwell
Partner & National Head of Construction & Engineering
Malin Svanberg Larsson
Partner
Shraiya Thapa
Senior Associate, Knowledge Management Lawyer
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