Society is rapidly accelerating the volume of data we create, which is fundamentally important to how we work, live and play. If data centers are the bricks that hold modern society together, then the power that operates them is the mortar. According to JLL new North American Data Center Report H2 2023demand for data centers remained strong throughout the year, but the search for electricity and land in a context of limited supply requires turning to secondary markets and new emerging markets.
While data center demand shows no signs of slowing, power availability and delivery times continue to hold back absorption. For primary markets, the majority of net rentals in the second half of 2023 were for products under construction or planned, rather than existing inventory. JLL expects pre-leasing to continue to accelerate as construction and power delivery timelines are not expected to slow over the next 12 months.
“Demand continues to reach all-time highs and data center growth is rapidly expanding from power-hungry core markets,” said Andy Cvengros, managing director of data center markets at JLL. “With almost all of the capacity coming online this year already pre-leased, data center users need to plan their IT strategy further in advance and commit to space and supply in accelerated times to find the capacity adapted to their needs.
Provide
- Denver and Colorado Springs will experience an increase in supply as providers continue to expand their electric capabilities at existing sites as well as new developments, which we will see come online in the next couple of years.
“Data center development will expand wherever there is sufficient energy and land available,” said Kari Beets, senior director of data center and industrial research at JLL. “As capacity becomes constrained in major markets, developers will seek unavailable power, particularly for AI uses where latency is less of a concern. New markets and tertiary outposts will open, focused on reusing developed electrical capacity for other uses.
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AI and large language models (LLMs) like ChatGPT require a huge amount of power and their popularity is skyrocketing. ChatGPT had just over 100 million monthly users in January 2023. As of November, it had over 100 million weekly active users. Additionally, the training of ChatGPT-3 consumed more than 1,287 MWh of energy. With hundreds of millions of daily requests, ChatGPT consumes as much energy as 33,000 homes.
“More and more businesses and governments are exploring AI to do everything from customer service chatbots to advanced data analysis to operations management to achieve business goals,” said Matt Landek, general manager, Data Center & Telecom, Work Dynamics, JLL. “All of this requires not only a huge amount of energy, but also the need for additional infrastructure to handle this capacity. »
- The Denver/Colorado Springs market has great potential for colocation demand growth due to inbound supply and high concentration of technology and AI customers in the market. The robust fiber optic network, affordable electricity, and diverse and reliable power grid are some of the reasons why customers continue to show interest in this market.
Market Trends
The core construction represents only part of the new data center capacity. Owners are expanding existing data centers both horizontally and vertically. Upgrades to existing electrical infrastructure or on-site power generation can also add capacity, making data centers denser in megawatts per square foot. Developers and businesses are realizing that their existing design does not support the power-intensive demands of AI and that traditional air cooling technologies are no longer efficient, paving the way for an alternative method such than liquid cooling and to more significant changes in design and operations.
- With the introduction of new capacity in Colorado Springs, JLL expects to see more development occur in this market in 2024 and beyond.
Download the full report HERE.
