Data center industry momentum surges into second half of 2018
Skyrocketing demand and absorption rates spark revolution of the industry
CHICAGO, Aug. 30, 2018 — Building on growing momentum from the first half of 2018, the global data center industry is in a great position to meet increased demand and navigate economic uncertainty, according to JLL's latest Data Center Outlook. JLL's analysis of the data center industry reveals that the U.S., Canada, EMEA, and APAC amassed a staggering 421.2 megawatts (MW), with the U.S and Canada leading absorption (292.1 MW), up 31.9 percent from the first half of 2017.
JLL is tracking substantial demand over the past year and increased construction pipelines in the U.S., Canada, EMEA and APAC to meet the need for more data center space. Currently, 759.7 MW of new construction is under way across the globe.
"Though the majority of new data center product is being developed in the U.S., the full scope of our industry's global pipeline is a testament to consumer demand increasing everywhere," said Bo Bond, JLL Managing Director and Data Center Solutions Co-Lead.
Added Mark Bauer, JLL Managing Director and Data Center Solutions Co-Lead, "Considering the role that digital connectivity plays in our everyday lives and its increased application, there's no sign of this appetite for data center and cloud space abating anytime soon."
For example, social media is playing a significant role in data center development in Northern Virginia. JLL tracked just under 100 MW of absorption which can be directly attributed to cloud providers ramping up to meet growing demand.
To the west, Austin/San Antonio and Northern California saw the most activity by percentage of total absorption, driven by cloud providers' desire to remain close to their growing end-user base. Additionally, Austin/San Antonio saw its value strengthened as a disaster recovery location due to the impact of Hurricane Harvey.
JLL also identified five trends impacting the data center industry through 2018:
- Data center REITs, on the road to recovery: Despite a difficult first few months, recent stock activity signals a strong second half for data center REITs.
- NAREIT in review: The latest National Association of Real Estate Investment Trusts (NAREIT) forum in New York delivered confidence for the industry, despite geopolitical and economic concerns. This sentiment is compounded with strong leasing momentum in the first half of 2018.
- SD-WAN redefining data center connectivity: Companies are adopting software-defined (SD) networking and moving away from hardware to reduce costs and improve centralized management.
- Blockchain continues to be more than just hype: Blockchain is more than a buzz word. Data centers are receiving growing demand from the technology as companies move to increase storage capacity and improve data processing.
- Data center contracts modernizing, driven by changing user needs: Contracts are continually evolving as applications have been virtualized and cloud has become an enterprise strategy. The focus is shifting from just power and space to flexibility and portability to accommodate rapid technological changes in the sector.
JLL's global Data Center Solutions team has delivered customized data center services and strategies to many of the world's largest corporations. JLL understands the technical elements that are crucial to facilities and helps companies determine the best IT and data center strategy for their business objectives.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries and a global workforce of 86,000 as of June 30, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.