Society is rapidly accelerating the volume of data we create, which is foundationally important to the way we work, live and play. If data centers are the bricks holding modern society together, then the power that operates them are the mortar. According to JLL’s new H2 2023 North American Data Center Report, data center demand remained strong throughout the year, but the search for power and land among limited supply is forcing a shift toward secondary and new, emerging markets.
As data center demand shows no sign of deceleration, power availability and delivery timelines continue to damper absorption. For primary markets, most of the net leasing in H2 2023 occurred in under-construction or planned product, rather than existing inventory. JLL expects pre-leasing will continue to accelerate as construction and power delivery timelines are not likely to slow over the next 12 months.
“Demand continues to be at all-time highs, and data center growth is rapidly expanding from core markets in search of power,” said Andy Cvengros, managing director of data center markets, JLL. “Given almost all of the capacity coming online this year is already pre-leased, data center users must plan further ahead in their IT strategy and commit to space and power on accelerated timelines to find capacity to fit their requirements.”
Supply
- Denver and Colorado Springs will see a rise in supply as providers continue to expand their power capabilities on existing sites along with new developments, which we will see come online in the next couple years.
“Data center developments will expand to wherever there is enough power and available land,” said Kari Beets, senior manager of data center and industries research, JLL. “As capacity becomes limited in major markets, developers will seek stranded power, especially for AI uses for which latency is less of a concern. New tertiary markets and outposts will open, focused on reusing power capacity developed for other uses.”
Demand
AI and Large Language Models (LLM) like ChatGPT require tremendous amounts of power, and its popularity is soaring. ChatGPT had just over 100 million monthly users in January 2023. By November, it had over 100 million active users weekly. Additionally, training of ChatGPT-3 consumed over 1,287 MWh of power. With hundreds of millions of daily queries, ChatGPT uses about as much power as 33,000 households.
“More and more companies and governments are exploring AI to do everything from customer service chatbots to advanced data analytics to operations management in order to achieve corporate objectives,” said Matt Landek, managing director, Data Center & Telecom, Work Dynamics, JLL. “All of this not only requires a tremendous amount of power but the need for additional infrastructure to handle the capacity.”
- The Denver/Colorado Springs market shows great potential for growth in colocation demand due to incoming supply and the high concentration of technology and AI customers in the market. The robust fiber network, affordable power and diverse and reliable power grid are some of the reasons that customers continue to be interested in this market.
Market Trends
Ground-up construction is just a portion of new data center capacity. Owners are expanding existing data centers both horizontally and vertically. Upgrades in existing power infrastructure or onsite power generation can also add capacity – making data centers denser in megawatts per square foot. Developers and enterprises realize their existing design does not support AI’s power-hungry demands, and traditional air-cooling technologies are no longer effective, ushering in an alternative method such as liquid cooling and greater change to design and operations.
- With new capacity being brought into Colorado Springs, JLL expects to see more development happen in this market in 2024 and beyond.
Download the full report HERE.
