Rapidly Expanding Data Needs Accelerate Growth and Drive Investor Interest, Even As Headwinds Persist

Primary markets: many of these markets are now pushing beyond the 1,000MW mark. They will continue to see strong growth as colocation and hyperscalers consolidate their positions in safe metros that have become sub-regional hubs.

Secondary markets: typically have 100-600MW of supply and have recently become the focus of attention as investors, lenders and developers seek new opportunities in less crowded markets.

Emerging markets: continue to be challenged by varied constraints such as infrastructure, regulatory requirements, skills, and political instability and have traditionally been treated with caution. However new smaller data centers such as containerized, modular, pre-fabricated and hyper converged infrastructure; as well as national data sovereignty laws mandating in-country data storage, are contributing to the opening of these markets. Additionally, as other markets become more developed, emerging markets present an opportunity with fewer land and power constraints.

Global Dynamics and Perspectives

Internet usage is almost universal, reaching 91% in North America, 87% in Europe and 73% Asia Pacific, and mobile phone subscription and use rates are even higher at above 90% in most markets. The demand from smartphonebased applications has driven an appetite for more digital infrastructure from cloud service providers, hyperscalers and over-the-top media companies in all regions. The global colocation data center market size is forecast to grow with a 5-year CAGR of 11.3% from 2021-2026, and the hyperscale market is expected to grow even faster, at approximately a 20% CAGR.

Opportunities Sustainability and energy efficiency are top priorities for data center users, operators, and investors. Those who react the fastest and improve efficiency with both energy and water usage stand to benefit as environmental impacts are top-of-mind for most leading companies.

Challenges

Supply chain delays have limited new construction, altering market dynamics toward pre-leasing. Skills shortages in technical fields limits new construction and makes it more difficult to own and operate a data center.

Demand Infuencers The fastest-growing segments of the data center space are hyperscalers and edge data centers.

The rise of artificial intelligence (AI) will both bolster demand, with increased data usage, and improve computing efficiency.

Investor Impact Capital markets pricing challenges are causing decreasing volumes across all sectors, but data centers still have high interest from investors.

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