Digital companies and technology power data center demand to near record levels for second consecutive year
Spend on public cloud services is projected to reach $4.1 trillion in 2021
CHICAGO, Sept. 9, 2021 – Cloud, technology, and social media companies are driving near-record levels of data center demand around the world, signaling another strong year in 2021 according to JLL’s new Data Center Outlook. As vaccination rollouts continue and lockdowns are lifted, spend on public cloud services is projected to jump 8.4 percent in 2021 reaching $4.1 trillion, according to Gartner.
“The pandemic forced organizations to tighten their budgets amid economic uncertainty, including IT spend,” said David Barnett, Director, Americas Research, JLL. “Much of this growth is fueled by technology initiatives and employee management platforms. Though COVID-19 accelerated digitization and connectivity for many organizations to maintain regular business activity last year, overall global IT spending reached a historical low.”
Amid reentry, companies are making more decisions related to their workplace strategies and hybrid work arrangements. JLL Research found that while hybrid work will remain durable in a post-COVID-19 environment, the office will remain the central component of the working ecosystem. To maintain flexibility, manage facilities, and implement dynamic occupancy plans, companies will need to invest in smart technologies to drive real-time decision-making. As a result, these investments will increase demand for data center capacity.
“The resurgence of enterprise activity reflects the evolving landscape of the pandemic and the global progress on vaccine administration and restriction lifts,” said Andy Cvengros, Managing Director, JLL. “Employees and C-suite leaders are eager to work face to face with colleagues. Adopting comprehensive connectivity applications, healthy assets, and workplaces that use data to enhance health and well-being are more critical than ever.”
Global construction remained robust during the first half of 2021, according to the report. U.S. activity ramped up from 611.8 MW in the end of 2020 to 680.8 MW in the first half of 2021, just shy of the record set in first half of 2020 when the pipeline reached 694.5 MW under construction. Northern Virginia leads domestic markets in construction activity, while major gains were made in the notably tight markets of Northern California and Northwest which saw vacancy levels fall to single digits.
In Europe, the construction pipeline stayed virtually the same in the first half of 2021 compared to year-end 2020. Over 8.8 MW were delivered in London, reducing the pipeline from 117.5 MW in year-end 2020 to 108.7 in the first half of 2020. JLL Research forecast an additional 117 MW to deliver by year-end.
The report also discusses new insights on occupier and investor sentiment toward sustainability initiatives for data centers, which historically require significant power and water. According to JLL’s latest Sustainable Real Estate survey of over 550 corporate real estate leaders, 7 in 10 occupiers are willing to pay a rental premium to lease green buildings in the future, and 83 percent of occupiers and 78 percent of investors understand that climate change imposes a financial risk to their business.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.