Data centers are becoming increasingly important in today’s society and their demand continues to grow. According to JLL’s North America Data Report, the year 2023 saw a strong demand for data centers. However, this high demand has led to limited availability and increased preleasing in primary markets as well as a focus on secondary and tertiary markets.
The main drivers of this increasing demand include Generative AI which requires large amounts of power, leading to significant deployments in New York and New Jersey. Additionally, there is a continuous rise in cloud and hyperscale usage which makes it challenging for enterprise users to find suitable colocation space with sufficient power capacity. Proximity to interconnection points also plays a role in site selection.
In terms of construction, there is currently over 5.3GW of under-construction data center capacity across primary and secondary markets but most of it is already preleased with only small portions available two or more years from now. Existing data centers are also undergoing expansions due to the realization that traditional designs cannot support the power demands required by AI technology.
As land becomes scarce for new developments, developers are turning towards tertiary markets such as Columbus (OH), Reno (NV), Minneapolis (MN), Mississippi (MS) , Indiana(IN)and Latin/South American countries where they can reuse existing infrastructure developed for other purposes.
JLL analysts predict that this trend will continue as major markets reach their maximum capacity while developers seek out new locations with available power supply for future projects focused on AI technology applications where latency isn’t an issue.
