Data Center Outlook - H1 2018
In the first half of 2018 steady absorption and leasing volume were widespread across data center markets and setting a strong basis for the remaining six months of the year. While economic and geopolitical uncertainties ranging from trade wars to predicted recessions were prevalent in the last several months, users’ insatiable need for data center capacity continued to drive strength throughout the sector –with both tenured and emerging markets demonstrating strong fundamentals.
So far this year, we’ve seen an incredible amount of traction in the data center industry, even amid shifting fundamentals of the business. Blockchain continues to gain both global and business adoption as industries from healthcare and finance to real estate and automotive begin to experiment with the powerful platform. As a growing number of companies leverage blockchain, data centers will also continue to see growing demand from the technology as more and more data is being ground by more and more users.
Additionally, the "standard lease" for data center capacity is morphing and modernizing with users' shifting needs. Today, we’re seeing many long-term 5- to 10-year contracts begin to roll – and the conversation of large-scale restructures surfacing. Today’s users’ needs have shifted significantly from where the industry stood five-plus years ago, and new dynamic contracts are a signpost of that directional change. Multifaceted flexible leases are a requirement for today’s modern data center user. Users are no longer having a "space and power" conversation, but need to build in flexibility for the next 2, 5, even 10 years as technology continues to evolve at a rapidly growing pace. Providers are encouraging the change as they push into emerging markets and structure contracts to have "portability" among different geographies, but more importantly, among different service and product lines.