[Edaily Marketin, Reporter KIM SUNG-SOO ] A logistics center in Hanam, Gyeonggi Province, is being transformed into a data center (DC). As the development of hyperscale (large-scale) data centers within the Seoul metropolitan area becomes increasingly difficult, this is an example of developing a relatively small-scale “edge data center” by repurposing an existing building.

Industry experts predict that if power supply and permitting constraints for data centers in the Seoul metropolitan area persist, the development of edge data centers utilizing existing buildings or small plots of land will increase further.

Hanam Logistics Center

to Be Repurposed

… Developed as an Edge DC

According to the financial investment industry on the 22nd, the project developer, Hanam Edge Center PFV, is pursuing a development project to repurpose a logistics center located at 595 Pungsan-dong, Hanam City, Gyeonggi Province,

into an

edge data center.

Rather than demolishing the existing logistics center and building a new one, the plan involves repurposing the building and carrying out major renovations to convert it into a data center. Upon completion, the data center will be leased out for operation and management.

The edge data center under development will consist of three basement levels and eight above-ground floors, with a total floor area of 20,403 square meters (approximately 6,172 pyeong). Construction has already begun, with CJ Korea Express’s Construction Division serving as the general contractor. The project is scheduled for completion in August of next year.

Funding has also been finalized. Following the securing of a 44 billion won bridge loan in February, Hanam Edge Center PFV secured a total of 162 billion won in main project financing (PF) in July. The maturity date for this loan is January 27, 2028.

The 162 billion won main PF consists of 142 billion won in senior Tranche A and 20 billion won in subordinated Tranche B. Kyobo Securities served as the lead underwriter. Tranche A consists of a 100 billion won credit line and a 42 billion won lump-sum loan, while Tranche B consists entirely of a 20 billion won lump-sum loan.

This project is also cited as an example illustrating recent changes in the Seoul metropolitan area’s data center development market.

While the development of hyperscale data centers consuming hundreds of MW (megawatts) of power previously drew market attention, there is now a growing trend toward the development of small-scale data centers with power consumption of 10 MW or less. This is because it is becoming increasingly difficult to secure land and power for the construction of new large-scale data centers.

Seoul Metropolitan Area Power Grid Saturated… Expansion of Small-Scale Data Center Development

In particular, “securing power” has emerged as a key variable in data center

development

. This is because, as the Seoul metropolitan area’s power grid becomes saturated, there have been cases where developers were unable to secure actual power even after receiving data center permits.

As of March of this year, more than half (279 cases) of the applications for technical reviews of power system impact assessments for data centers in the Seoul metropolitan area (522 cases) were deemed “unfeasible.” The rate of unfeasible cases, based on the total number of applications, reached 53.4%.

The “Technical Review for Data Center Power System Impact Assessment” is a system that determines the feasibility of electricity supply by conducting a preliminary quantitative and qualitative assessment of the impact that data centers—expected to consume 10 MW or more of power—will have on the power grid.

However, in regions with saturated power grids—such as the Seoul Metropolitan Area—the criteria for passing the technical review have been tightened, resulting in a very low pass rate. The government is also encouraging the relocation of data centers to regional areas to alleviate the burden of electricity demand in the Seoul Metropolitan Area.

Public complaints and permitting issues are also variables. Since data centers consume large amounts of electricity, there is a possibility that local residents will raise concerns about heat generation and electromagnetic waves. As the scale of data centers increases, so does the burden of simultaneously resolving power supply and public complaint issues.

For this reason, approaches such as repurposing existing facilities or constructing small-scale data centers in areas with relatively lower development burdens are gaining attention in the Seoul metropolitan area. There is also a growing number of cases where small-scale data centers—ranging from 400 to 500 pyeong—are being developed by repurposing existing facilities in downtown areas like Gangnam or in heavy industrial zones.

The Hanam project aligns with this trend. It utilizes an existing logistics center to reduce the burden associated with large-scale new development while capitalizing on the locational advantages of being in the Seoul metropolitan area.

An official from the financial investment industry stated, “Demand for data centers is growing amid the spread of artificial intelligence (AI),” adding, “If power and permitting constraints for data centers in the Seoul metropolitan area persist, the development of edge data centers utilizing existing buildings or small plots of land will increase further.”