JLL: JLL releases its 2023 Global Data Center Outlook
Apr 17, 2023 | Posted by MadalineDunn
JLL recently released its 2023 Global Data Center Outlook and revealed that despite economic uncertainty, the data center industry continues to boom, especially in Northern Virginia, which continues to remain top of the data center market list.
The outlook report suggests that demand from smartphone-based applications has driven an increase in and appetite for more digital infrastructure across the board. That said, supply chain issues were highlighted as one of the main challenges to expansion and have reportedly limited new construction, with more emphasis on pre-leasing. However, the report forecasts that these issues should peter out throughout 2024 as operators and users “adjust” to slower timelines and manufacturers source additional suppliers and increase processes efficiency.
Additionally, the report outlined that another part of this is a skills shortage in technical fields. Specifically, it pointed to data from Uptime Institute’s annual data center survey, which found that nearly half of the workforce has more than 20 years of working experience in the sector, and in the next decade, will be approaching retirement age. The issue of an aging workforce is coupled with limited entrants into the data center space; women also remain massively underrepresented in the field.
Speaking about the labor shortage, Matt Landek, managing director of data centers & telecom, work dynamics, JLL, said: “At a time when our increasingly digital world is exploding with demand, data center operators are discovering that younger generations pose an entirely new recruitment challenge.” Landek said that in order to future-proof the labor pipeline, scaling robust training and recruitment programs “will be key in 2023 and beyond to build a stronger, more diverse pipeline of young talent.”
Aside from these industry challenges, the report outlined there are a number of opportunities to be capitalized on, including prioritizing sustainability and energy efficiency. The report suggested that those who react the fastest will benefit due to environmental impacts being a top consideration for most leading companies. In this regard, it explored a number of different initiatives and regulatory changes that are incentivizing sustainable transitions, for example, the Corporate Sustainability Reporting Directive (CSRD) and Europe Climate Neutral Data Center Pact (CNDCP) in Europe, the data center moratorium in Singapore and the U.S. SEC rule on climate disclosures in the United States.
With regard to the leading data center market, the JLL report said that developed regional hub markets such as Northern Virginia, Hong Kong and Frankfurt will continue to grow, despite higher land and utility costs due to their low-risk environment and stability. That said, it did spotlight that energy constraints in these areas are driving growth out into secondary markets.
The evolution of machine learning chatbots and AI is also pegged to accelerate the demand for data centers, with the report projecting that the “AI goldrush is firmly on the way.” The report outlined that in addition to increasing data center use, AI will be used to support AI’s high density and performance requirements, with projections that AI will be used for half of all cloud data centers by 2025. “AI will help react to how the data center is performing in real time. AI can also facilitate operation-based technology such as liquid cooling. This can help data centers become more efficient, cost effective in the long term and sustainable, as liquid cooling is estimated to be up to 3,000 times more effective than air,” the report said.
The outlook report suggests that demand from smartphone-based applications has driven an increase in and appetite for more digital infrastructure across the board. That said, supply chain issues were highlighted as one of the main challenges to expansion and have reportedly limited new construction, with more emphasis on pre-leasing. However, the report forecasts that these issues should peter out throughout 2024 as operators and users “adjust” to slower timelines and manufacturers source additional suppliers and increase processes efficiency.
Additionally, the report outlined that another part of this is a skills shortage in technical fields. Specifically, it pointed to data from Uptime Institute’s annual data center survey, which found that nearly half of the workforce has more than 20 years of working experience in the sector, and in the next decade, will be approaching retirement age. The issue of an aging workforce is coupled with limited entrants into the data center space; women also remain massively underrepresented in the field.
Speaking about the labor shortage, Matt Landek, managing director of data centers & telecom, work dynamics, JLL, said: “At a time when our increasingly digital world is exploding with demand, data center operators are discovering that younger generations pose an entirely new recruitment challenge.” Landek said that in order to future-proof the labor pipeline, scaling robust training and recruitment programs “will be key in 2023 and beyond to build a stronger, more diverse pipeline of young talent.”
Aside from these industry challenges, the report outlined there are a number of opportunities to be capitalized on, including prioritizing sustainability and energy efficiency. The report suggested that those who react the fastest will benefit due to environmental impacts being a top consideration for most leading companies. In this regard, it explored a number of different initiatives and regulatory changes that are incentivizing sustainable transitions, for example, the Corporate Sustainability Reporting Directive (CSRD) and Europe Climate Neutral Data Center Pact (CNDCP) in Europe, the data center moratorium in Singapore and the U.S. SEC rule on climate disclosures in the United States.
With regard to the leading data center market, the JLL report said that developed regional hub markets such as Northern Virginia, Hong Kong and Frankfurt will continue to grow, despite higher land and utility costs due to their low-risk environment and stability. That said, it did spotlight that energy constraints in these areas are driving growth out into secondary markets.
The evolution of machine learning chatbots and AI is also pegged to accelerate the demand for data centers, with the report projecting that the “AI goldrush is firmly on the way.” The report outlined that in addition to increasing data center use, AI will be used to support AI’s high density and performance requirements, with projections that AI will be used for half of all cloud data centers by 2025. “AI will help react to how the data center is performing in real time. AI can also facilitate operation-based technology such as liquid cooling. This can help data centers become more efficient, cost effective in the long term and sustainable, as liquid cooling is estimated to be up to 3,000 times more effective than air,” the report said.
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