Skip Ribbon Commands
Skip to main content

News release


Data Center Global Market Expansion Expected to Soar in 2017

Cloud adoption, M&A and geopolitical changes expected to shift the data center landscape worldwide

CHICAGO, Jan. 19, 2017 – The public's obsession with online video binge-watching is just one of the factors helping the data center industry flourish worldwide. Massive movement of data from private corporate servers to cloud-based solutions and a growing corporate thirst for Internet of Things (IoT) initiatives are pushing corporate demand too, says JLL's new Data Center Outlook. With data consumption skyrocketing, some major cloud providers are anticipating the need to triple their infrastructure by 2020.

JLL's report also notes that while data center demand is strong, industry growth could be tempered by external risks such as foreign currency exchange fluctuations, rising interest rates, M&A disruptions and policy shifts.

"The data centers market is very fluid, but a few things are certain. Cloud adoption is soaring, technology innovation will not slow down, data center portfolios are consolidating and rack densities are ascending rapidly," said Bo Bond, Managing Director and Data Center Solutions Co-Lead, JLL. "Companies needed to start their strategic planning yesterday to have any prospect of staying ahead."

Cloud adoption and evolving user demands alter the data center footprint
Promising new technologies from the big three cloud providers, coupled with the expansion of the IoT, are nudging more business leaders to the cloud. JLL anticipates swifter movement to the cloud so the industry's hub markets, from Silicon Valley and Northern Virginia to London and Tokyo, will force cloud service providers into expansion mode.

In 2017, data center lease negotiations will be more complex. Data center footprints are being reconfigured across the map, with each lease representing an opportunity for data center users to capitalize on hybrid cloud technology, as well as restructuring/right-sizing their colocation footprint. Meanwhile, demand for space at the "Edge" of the network, in lower tier, yet still highly populated markets, will still remain active, offering access to consumers outside the traditional core markets.

Shifting policy and economic trends spark new questions
The new U.S. presidential administration creates some uncertainty for the industry's future. Anticipated energy cost reductions and regulatory oversight could potentially help alleviate the costs of delivering more capacity.  

Data center leaders are also investigating the potential impact of new federal mandates for data center optimization, including energy metering and power usage effectiveness requirements that must be met by the end of 2018. Cost-saving and efficiency measures can be meaningful for the industry, which consumed roughly 70 billion kilowatt-hours of electricity in 2014 alone. 

Meanwhile, stricter data sovereignty laws are creating complexities for the industry globally. For example, mandates for Canadian companies to store their data on Canadian soil could drastically change the level of data moved to the Canadian cloud. Additionally, European data centers continue to grapple with the still-unknown impact of Brexit, which will not be fully realized until London's data center industry is formally removed from the European Union in 2019. 

High stakes M&A activity leading to industry consolidation
M&A deals surged in 2016, a trend that is on pace to continue through 2017. As well-known providers set their bidding sights on colocation companies, the race is beginning to fall to a few key players, such as Equinix and Digital Realty. 

Industry leaders will be far better positioned for future success than new or emerging players. As interest in hyperscale sites goes up alongside the need for faster, better technology, users are becoming less likely to trust newcomers to the providers' scene. 

"User demand for smart data center solutions will only continue to heat up, with operators feeling the pressure to deliver more data, faster and more flexibly than ever," said Jon Meisel, Managing Director and Data Center Solutions Market Director, JLL. "Smart maneuvering will be necessary for users and operators alike to flourish in the coming months."  

For more insights on the outlook for the data center industry in 2017, download Data Center 2017 Outlook: A Wave of Global Momentum.  

About JLL Data Center Solutions
JLL's global Data Center Solutions team has delivered customized data center services and strategies to many of the world's largest corporations. With the expertise of having managed 1110 megawatts of critical facilities transactions, our team is equipped to assist companies throughout the site selection process. We understand the technical elements that are crucial to your facility and will help you determine the best IT and data center strategy for your business objectives. 

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. JLL is a Fortune 500 company with, as of December 31, 2015, revenue of $6.0 billion and fee revenue of $5.2 billion, more than 280 corporate offices, operations in over 80 countries and a global workforce of more than 70,000.  On behalf of its clients, the company provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. As of September 30, 2016, its investment management business, LaSalle Investment Management, has $59.7 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit