January  11, 2023

An article from JLL (a Chicago Real-estate firm) provided some insight based upon market research for the 2nd half of 2022.

Altus will provide our take on them and how we think they may impact 2023.

Limited availability of power and land in major markets will stimulate expansion into non-traditional hubs.

In the first half of 2022 the US market demand passed 1,087 Mega Watts which is over 95% of the total demand from 2021. 2022 saw a huge uptick in leasing and construction activity which has challenged the market. The problem will be how to power these new sites. Supply chain issues are still a problem, and we see some manufacturers quoting 8 months or more to ship a solution or product.

For planning – a 3-to-5-year capacity outlook may not be far enough out to account for the power and supply chain issues in the build. For a typical DC build project timeline – fit out and commissioning may be far enough out for you to be almost 30% through your capacity plan before you deploy your first server.

Which brings us to:

Supply chain delays will persist and continue to cause issues throughout the next 24 months.

As we continue to face these supply chain challenges it seems product delays can be around 50+ weeks or more. This is aggravated by an increase in demand for edge and hyperscale data centers. The pandemic helped this increase in demand due to a desire for better mobile performance and storage capacities.

Enterprise demand for cloud will skyrocket as businesses move to full or hybrid cloud models.

Cloud spending is turning out to be gigantic. In fact, many of our customers are finding out that there are hidden costs they didn’t expect. A migration to SaaS models as well as a move (in part or in full) to a multi-tenant data center (Colocation or CoLo) has been accelerated in 2022 and will continue to increase in 2023.

The first quarter in 2022 showed cloud spending capping out at over $53 billion. It’s expected to grow to $200 billion by the end of this year.

Many times, the “rush” to cloud or hybrid models leave needed security and recovery techniques to be “figured out” later. Some customers are even considering a move BACK to traditional models until some of these things can be figured out.

As net zero carbon mandates become the norm, sustainability will endure as a main industry focus.

Many of our customers who are trying to migrate from aging data centers to cloud or hybrid configurations have the natural desire to design sustainability into those initiatives. This places a sharp focus on Power Usage Effectiveness (PUE).

Data centers in the US account for 2% of the total electricity usage and (for example) a 15MW data center will use the same water as two 18-hole golf courses. Yikes!

This sustainability trend will increase substantially in 2023.

Private equity and real estate involvement will continue to be the major sources of cash flow into the sector.

Investors are continuing to invest in hyperscale data centers. Data center transaction volume has grown at a compound annual rate of 15% through the last 10 years. In 2023, that may increase that trend to a higher percentage.

Trends in “work from anywhere” and social networking (including new virtual offerings) all place more and more demand on the hyperscale data centers.

Scale-out for compute, storage and networking will be the norm and increase many-fold in 2023.

Altus Technologies Corporation keeps tabs on these and other trends as part of our data center service offerings.

Read the 2022 JLL article here.

Contact Altus today for a no-commitment chat about  your data center plans.