The demand for data centers is growing enormously, but we do not have the power to deal with it
New research warns that demand for data center space has skyrocketed globally in recent months due to the rise of artificial intelligence (AI) technologies.
According to commercial real estate firm CBRE (via The register), operators in North America, Europe, Latin America and the Asia-Pacific region cite power shortages as their top concern.
Additionally, large enterprises are facing challenges securing data center capacity due to construction delays that are unable to keep up with the sector’s growth, and energy challenges.
AI requires more data centers than we can currently build
In North America, data center inventory grew 24.4% year-over-year through the first three months of 2024, leading to an addition of 807.5 MW of capacity across the region’s four largest markets: Northern Virginia, Chicago, Dallas and Silicon Valley.
The European data center market also grew significantly, by almost 20% in the first quarter. Paris, which is part of the FLAP group (Frankfurt, London, Amsterdam and Paris) of major markets, saw growth of 40% year-on-year.
Andrew Jay, Head of Data Center Solutions for Europe at CBRE, commented: “A shortage of power and land, combined with stricter regulations, are the most prominent inhibitors when it comes to data center development in Europe.”
The sector also grew significantly in Latin America (up 15%) and Asia Pacific (up 22%), with cities such as Tokyo, Sydney, Hong Kong and Singapore emerging as key locations for investment.
Simple economics, however, means that increased demand has led to increased costs. In North America, average demand prices for a typical 250-500kW requirement rose 20% in the first quarter of 2024, a sign of the increased pressure on the industry. Prices in Europe have also risen steadily.
Kevin Restivo, Head of Data Center Research in Europe, indicated that secondary European markets will emerge in the future to meet demand. He mentioned Oslo and Madrid as some of the markets that will see significant investment.