Data center demand is booming - but we don't have the power to deal with it

Racks of servers inside a data center.
(Image credit: Future)

Demand for data center space has surged globally in recent months following the boom in artifical intelligence (AI) technologies, new reserach has warned.

However, according to commercial real estate firm CBRE (via The Register), operators across North America, Europe, Latin America and Asia-Pacific cite power shortages as their top concerns.

Moreover, large corporations are also facing difficulties in securing data center capacity due to construction delays, which are not meeting the sector’s growth, and power challenges.

AI needs more data centers than we can currently build

In North America, data center inventory grew by 24.4% year-over-year during the first three months of 2024, leading to 807.5 MW of capacity being added across the region's four largest markets: Northern Virginia, Chicago, Dallas, and Silicon Valley.

Europe’s data center market also grew considerably, by nearly 20% during Q1. Paris, which makes up part of the FLAP group (Frankfurt, London, Amsterdam and Paris) of major markets, saw a 40% year-on-year growth.

CBRE’s Head of Data Center Solutions for Europe, Andrew Jay, commented: “Power and land shortages, combined with increased regulation are the most prominent inhibiting factors when it comes to data center development in Europe.”

Latin America (up by 15%) and Asia-Pacific (up by 22%) also saw considerable growth in the sector, with cities like Tokyo, Sydney, Hong Kong and Singapore emerging as key locations for investment. 

However, simple economics means that increased demand has resulted in increased costs. In North America, average asking rates for a typical 250-500kW requirement jumped by 20% in the first quarter of 2024, a sign of the increased pressure on the industry. Prices in Europe have also been steadily increasing.

Looking ahead, Kevin Restivo, Head of Data Center Research in Europe, indicated that secondary European markets have been emerging to keep up with demand, highlighting Oslo and Madrid among those set for plentiful investment.

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Craig Hale

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