Data Centre Outlook 2021

Quick takes:

Financial, tech and healthcare companies drive data centre spending and enterprise-level demand.
Sustainability takes centre stage amongst data centre providers and occupiers.
Investment and M&A hit new heights with record-breaking deal.
The global construction pipeline remains robust.

Data centre’s outlook is optimistic

Skyrocketing data usage, including streaming services and virtual connectivity, caused record demand for data centers in 2020, and the first half of 2021 got off to a strong start as well.

The top major data center REITs, which are the major operators and providers of data centre space globally, saw a strong resurgence in enterprise-level demand, driven by financial, technology and healthcare companies. The increased activity reflects the evolving landscape of the pandemic and the global progress on vaccine administration and restriction lifts.

The green gain

With health and wellness and sustainability at the forefront of many corporate agendas, the data centre industry is feeling the heat to use more efficient systems, renewable energy and carbon-cutting practices.

What does this look like for data centres ?

Here are three ways data centres are creating a greener industry and more sustainable world:

Green finance. The total amount of green bonds, with funds tied directly to sustainable projects, grew by 688 percent from 2014 to 2020, according to data from Climate Bonds Initiative.

Creative designs and operational solutions. Data centre developers and operators are making strides to use fewer building construction materials and optimize power usage effectiveness (PUE) and water usage effectiveness (WUE).

Industry and government partnerships. Government policies may act as an accelerant as more credits and subsidies are put into place to hit carbon-cutting goals across jurisdictions.

State of the industry

Demand for data centres is on pace for another strong year in 2021.

In Europe, London continues to lead the region in demand, largely driven by cloud companies.

In the United States in the first half of the year, absorption reached 273.6 MW across 14 domestic markets, the second-highest amount on record going back to 2018.

In Europe, London continues to lead the region in demand, largely driven by cloud companies.

In the United States in the first half of the year, absorption reached 273.6 MW across 14 domestic markets, the second-highest amount on record going back to 2018.

Last year was a record-breaking year for mergers and acquisitions and data centre investment. While activity is below last year’s pace, the industry still recorded the largest data centre deal ever in June of 2021.

The overall construction pipeline in North America is expected to grow throughout the year to meet increasing demand from cloud and technology companies, while in Europe, the pipeline virtually stayed the same in the first half of 2021 compared to year-end 2020.

Download JLL’s 2021 H1 Data Centre Outlook report for more insights on the industry’s performance.

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