Once a niche real estate business, data centers are quickly moving into the mainstream, fueled by the changing needs of businesses large and small, the endless growth of connected devices and the staggering daily volume of information moving across the internet.
According to the World Economic Forum, this data includes 500 million tweets, 294 billion emails, 4 petabytes of Facebook data, 65 billion messages sent on WhatsApp, and 5 billion internet searches. By 2025, it is estimated that there will be 463 exabytes (400,000,000,000,000,000,000,000 bytes) of data produced daily – that’s the equivalent of 212,765,957 DVDs per day.
As pointed out in a recent Development magazine article, data center developers want to locate new facilities near subsea cable landing stations and key internet exchange points such as Northern Virginia, New York, Northern California, Dallas and Chicago.
On the flip side, data centers are also moving toward the “edge,” that is, locations at a distance from the crossroads of cable landings and internet exchange points — a key trend to watch in 2020. Edge computing extends data processing and storage closer to a growing universe of sensors and devices that collect the data. A key use for edge computing is collecting and storing data from the internet of things (IoT), which is expected to number 75.44 billion devices by 2025. The commercial real estate industry uses data gathered by IoT-connected sensors to track tenant movement in buildings, energy use and much more.
Other data center trends to watch in 2020:
- Competitive data center rental rates. Competitive pricing is lowering average asking rental rates in many markets, according to a recent CBRE report. In the first half of 2019, 200 megawatts of new capacity was delivered. More than 411 MW of capacity is under construction and expected to be delivered in the short term, the reported noted.
- Data center acquisitions. There is a rush to acquire data centers: Fifty-two data center acquisitions closed during the first half of 2019, up 18% over 2018, according to CRN, a website focused on the information technology industry. Businesses are driving the trend as they continue to shift workloads to co-location facilities and cloud providers. Moving to the cloud saves companies money and frees up internal resources.
- Cloud-associated markets. Cloud-associated markets are growing at rates ranging from 10% to well over 40%. The cloud will double in under four years.
- Hyperscale data centers. The construction of hyperscale data centers — defined by market intelligence firm International Data Corporation as those with more than 5,000 servers — passed the 500 mark in the third quarter of 2019. Currently, it is taking just two years to build 100 of these massive server farms, and the rate of development is accelerating. This is a dramatic increase from the 390 hyperscale data centers that Synergy Research Group tracked at the end of 2017.
- Co-location data centers. The cloud server world is dominated by Amazon Web Services, Google, Microsoft and Alibaba — these are the single-tenant facilities. There is a growing market for the multitenant or retail facility known as the co-location data center. These facilities house many companies that each may only need one or two server racks.
- Hybrid data centers. Hybrid data centers will drive the industry to a new, flexible future, according to Align Communications. The hybrid data center provides a combination of access to private cloud and public cloud services.
Ron Derven is Contributing Editor to Development Magazine and writes on real estate topics for The New York Times