£106.6m land sale agreed for development of ‘hyperscale’ datacentre

Property group Harworth has exchanged contracts for conditional sale of 48 acres of land at its Skelton Grange site near Leeds to MSFT MCIO Ltd (Microsoft) for £106.6m.

This land will be used to accommodate a new hyperscale datacentre. It comprises two adjoining land parcels:

• Plot 1, which comprises 27 acres, will be sold on an unserviced basis for gross consideration of about £52.9m. Completion of the sale is targeted for half two 2024. Alongside completion of the sale of Plot 1, Harworth will be reimbursed about £500,000 for the costs it has incurred in securing additional power capacity for the site.
• Plot 2, which comprises 21 acres, will be sold on a serviced basis for gross consideration of about £53.2m. Completion of the sale is targeted for half one 2026.

Harworth says there is no current rental or other income associated with the land. It intends to use the sale’s net proceeds to support an increased focus on the direct development of Grade A Industrial & Logistics properties from its strategic landbank.

The former Skelton Grange power station site was acquired by Harworth in December 2014 for around £3m.

Harworth secured approval in November 2023 for 800,000 sq ft of Industrial & Logistics space at Skelton Grange, and most recently in May 2024, a reserved matters approval for a further 320,000 sq ft of Industrial & Logistics space.

Previous deals include a 19.5-acre land sale to Enfinium in 2020, on which it is developing a 49MW energy-from-waste (EfW) renewable electricity generation facility, and the grant of a lease in 2021 to facilitate development of a 100MW Battery Energy Storage System (BESS) facility on a 5.7-acre demise.

Harworth acquired a further 21 acres of adjoining land in 2023 to enhance the development potential of the overall scheme.

Upon completion of the latest deal, the group will retain 16 acres on which to promote around 250,000 sq ft of employment space.

This is in addition to the 77 acres owned by way of joint venture with The Aire Valley Land LLP at a neighbouring development, Gateway 45.

Once the newest development is complete, Skelton Grange is expected to provide 250,000 sq ft of Grade A Industrial & Logistics space, the hyperscale datacentre, a BESS facility, an EfW facility, and around 28 acres of land returned to a natural habitat.

Harworth estimates this will represent more than £4bn worth of inward investment providing a substantial boost to the economy.

Lynda Shillaw

Lynda Shillaw, chief executive, said: “This sale at Skelton Grange is the group’s largest to date and is yet another exemplary case study that demonstrates the successful regeneration of brownfield land.

“It further builds our expertise to include datacentres and evidences the growing spectrum of industries that continue to be attracted to the schemes that Harworth brings to the serviced land market.

“Over the last three years and, despite volatile market conditions, we have been successful in implementing our strategy, scaling the business and continuing to deliver market leading returns.

“We remain confident that we will reach our goal of growing our business to £1bn of EPRA NDV by 2027 and in our ability to continue to scale the business beyond this.”