Generative AI and IoT will power the global data center market to $317 billion by 2026, more than twice its size in 2020.
Real estate consulting firm JLL, which made the bold prediction for data centers and edge IT infrastructure, defines an edge data center as a facility that brings computing power closer to where the data is generated or consumed. Breakneck expansion of edge computing is being fueled not only by genAI and IoT but the need for faster data transfer and high computation, according to JLL.
“I live in Dallas, and I swear they build data centers left and right,” Mike Britton, chief information security officer of Abnormal Security, said in an interview. “It is another indication of the gold rush of AI, a push by companies like ServiceNow Inc. to add AI features to their products, and larger legacy companies reevaluating putting all their eggs in Azure, which had an outage this week,” he added.
Demand from enterprises and consumers for low latency, high computing, GenAI and omnipresence is likely to ensure the cloud environment and edge data centers remain healthy, JLL said. What is more, Asia Pacific and the Middle East North Africa regions present significant growth potential because of rising internet and mobile penetration among their rural populations. In the U.S., 21% of data center development is occurring in edge geographies.
“While the full and sustained impact of GenAI, and large language models for that matter, are not clearly understood, it is clear the continued development in this technology will be interdependent with growth in the data center industry,” Kristen Vosmaer, managing director of JLL Data Center Work Dynamics, said in an email message.
“The global race for large quantities of available power and developable land by the hyperscale companies and REITs underpin that AI is adding significantly to the supply-demand imbalance that could take upwards of a decade to even out,” Vosmaer said.
A rise in edge IT infrastructure focused on data centers will mirror the growth of IoT devices, JLL said. Its analysis projects IoT will surge at a compound annual growth rate of about 10% over the next five years. JLL cited the requirement for low latency and high bandwidth (41%) as the major drivers for edge data center deployments, followed by data security and privacy (38%).
Organizations increasingly rely on edge data centers to process and analyze data in real-time at the edge of the network for faster decision-making and more efficient operations, JLL concluded.
“Consumers and corporations will continue to adapt to transformational technologies within daily life, and without the distribution of data processing and storage across various locations, cutting edge efficiencies and solutions like IoT and generative AI will not transition to mainstream acceptance,” Jonathan Kinsey, EMEA lead and global chair, data center solutions, for JLL, said in a statement Thursday.
Of course, the proliferation of data centers near traffic has created strains on the grid, warns Talal Shamoon, CEO of Intertrust. “The killer app is in applying AI to virtual power systems,” Shamoon said in an interview. “It is a big, booming opportunity.”
