Data centre hubs in the United States, Europe and Asia Pacific are tapped to expand further as demand for digital capacity accelerates. JLL’s recently released global overview of the sector reports that the number of hyperscale sites — which house thousands of servers and equate to upwards of 100 megawatts (MW) of power demand — grew from 259 in 2015 to 700 by 2021, and is set to surpass 1,000 over the next 12 to 20 months with the completion of 314 facilities currently under construction.
“The capex trends of leading cloud service providers like Amazon, Google, Meta, Microsoft, Apple, Alibaba and ByteDance led to a sharp rise in the number of hyperscale data centres globally,” the report advises. “In 2023, data centre builds announcements of over 100 MW are not uncommon, whereas a decade ago 10 MW was a large requirement.”
The United States is home to 53 per cent of global hyperscale sites and is expected to retain its predominance. However, Canada is among nine countries where JLL analysts identify a surge in hyperscale development. The others include China, India, the United Kingdom, Ireland, Spain, Italy, Israel and Australia.
For now, though, Canada does not figure in JLL’s list of leading global data centre markets, which are defined as offering at least 600 MW of capacity. Northern Virginia, Chicago, Northern California and Dallas-Fort Worth are the four largest hubs in North America, collectively boasting 5,660 MW of existing capacity and 1,660 MW under development. Singapore, Tokyo and Hong Kong are the top players in Asia-Pacific, while London, Frankfurt and Amsterdam are the leaders in Europe.
Land scarcity, power constraints and rising costs for both commodities pose some challenges and are helping to fuel demand in secondary markets like Atlanta, Berlin and Dublin, but JLL analysts note that incumbent markets like North Virginia — the world’s largest with more than 3,440 MW of existing capacity and another 641 MW in development — have some entrenched advantages.
“It is difficult for other markets to build up the dense enterprise ecosystems, network connectivity infrastructure and service provider capabilities of these hubs. Enterprises and hyperscalers will plan to centralize or consolidate low-latency workloads from throughout the region into these hubs to enjoy economies of scale, minimize excess capacity and centralize governance,” they advise.
The general global slowdown in real estate transactions has also affected data centre deals, but the asset class continues to attract investor interest. “Due to high development costs and strong demand, supply continues to closely track absorption, keeping vacancy at record lows and allowing operators to keep strong pricing,” JLL analysts observe.
