Demand for new data center development in the U.S. is rapidly increasing, according to JLL’s 2H 2023 North American Data Center Report, It was released today (February 28th).
According to the real estate and investment management firm, this demand is being driven by the rise of AI and the continued growth of the cloud and hyperscale markets.
This boom has also caught the eye of savvy investors and private equity firms looking to join in the boom and provide opportunities for new entrants into the market.
However, there are many challenges. Major data center regions such as Northern Virginia and Phoenix lead the way with 1.6 GW and 884 MW of contract signings, followed by secondary markets such as the Northwest region, with 554 MW of new capacity signed in the second half of 2023. Ta.
Find new ground in search of power
With overwhelming support for AI and large-scale language models like ChatGPT, we grew from 100 million monthly users in January 2023 to 100 million weekly active users by November. Current data center owners are being forced to re-equip their data centers to squeeze as many megawatts per square foot as possible. Step in to quench your thirst for AI power.
This includes adding floors, on-site power generation, and upgrading cooling from traditional air cooling technology to more efficient methods such as liquid cooling.
Desiring more power and more land, data center users are planning their IT strategies further ahead and considering new geographies, according to Andy Quvenglos, managing director of data center markets at JLL. The company is now forced to “focus on securing space and power on an accelerated timeline.” Find the capacity that meets your requirements. ”
When land and power capacity become limited, developers look for new markets. New regions are moving in to meet demand. Salt Lake City is doubling its capacity. Atlanta is developing on its own, with new areas booming such as Columbus, Minneapolis, Reno, Mississippi, and Indiana.
Almost 20% of the data center capacity under construction will come from these secondary markets, and does not include foreign investors or users in Latin America, JLL said.
third party experts
Data centers are receiving increasing interest from external investors, with transaction value in the sector growing at a CAGR of 9% since 2013, the report said. However, while the companies supported by these funds are rapidly expanding, “data center frameworks are not yet in place,” he said. the people and processes to operate these data centers; ”
As a result, these companies are turning to experts in real estate management and other industries, which have a “rich pool of engineers trained for critical environments,” the report said. “Data centers are a unique asset class and require specific skills to operate at their best.With a shortage of trained engineers, investors looking to take advantage of this opportunity are looking to hire experienced operators. We need to partner with.”