AI rises as hyperscale and edge drive data centre demand, finds JLL

AI rises as hyperscale and edge drive data centre demand, finds JLL

Cloud Storage Server Futuristic Technology Cyber-World 3D AI Ill

The mass adoption of cloud computing and AI is driving exponential growth for the data centre industry, according to JLL’s latest Global Data Center Outlook report.

The report also found that hyperscale and edge computing is leading investor demand in the sector with the global colocation data centre market forecasted to grow 11.3% from 2021-2026.

Geographically, the US is witnesses the strongest appetite and accounts for 52% of all data centre transactions from 2018 to 2022.

At the same time, the US had 1,633MW of absorption in 2022 in the six US primary markets – Chicago Dallas-Fort Worth, New Jersey, Northern California, Northern Virginia and Phoenix. With a further 1,939MW under construction in these same markets.

“After the pandemic removed the four walls of the workplace, our new world of hybrid work has created an unprecedented need for digital technology. Employees are looking to their companies to create a seamless experience wherever they choose to work, requiring intelligent technology solutions to bridge the gap between the physical and the digital,” said Andy Cvengros, managing director, JLL.

“As this reliance on digital technology increases, the data centre industry is experiencing impressive growth and catching the eyes of investors and lenders as a strong, alternative asset class that has been relatively unimpacted by continued economic uncertainty.”

Hyperscalers and edge predicted to be the fastest-growing segments of the data centre industry, with the hyperscale market expected to grow 20% from 2021 to 2026. At present there are 314 new hyperscale sites in development globally, this is expected to surpass 1,000 by the end of 2024.

With the proliferation of AI tools like ChatGPT, the potential of generative AI to transform industries in 2023 is expected to accelerate demand for computing power in data centres. Half of all cloud data centres are expected to use AI by 2025.

The skills shortage for high-tech talent will remain a challenge for the data centre market and according to the Uptime Institute’s annual data centre survey, nearly half of the workforce is approaching retirement within the next decade, and younger workers without the necessary technical skills are unable to fill new roles quickly enough to keep pace with sector growth.

“At a time when our increasingly digital world is exploding with demand, data center operators are discovering that younger generations pose an entirely new recruitment challenge,” added Matt Landek, managing director of data centers & telecom, work dynamics at JLL.

“To help futureproof the industry and mitigate the labor pipeline drying up, scaling robust training and recruitment programs will be key in 2023 and beyond to build a stronger, more diverse pipeline of young talent.”

Data centres collectively account for approximately 2% of the total US electricity use, and, at the end of 2021, global data centre energy consumption reached 190.8 terawatt hours, 2.2 times more than 2020.

Gift this article