2020 Year-End Data Center Outlook
A review of the industry's latest trends and what to expect in 2021
Insatiable demand for data centers surged in 2020. India saw 28 percent growth in capacity additions on back of high demand. India is seeing the highest level of interest from big technology companies, cloud providers, and social media providers who are driving demand in every location. Robust expansion by global cloud players in established markets of Mumbai and Chennai continues as required infrastructure is in place. Hyderabad is attracting players with state support for infrastructure and incentives.
Despite initial slowing and leasing backlogs amid the pandemic, enterprise colocation demand picked up in the second half of 2020 while M&A activity and operator investment remain robust.
JLL identified five key themes in the year end of 2020
1. Insatiable cloud demand across the globe
In North America, cloud dominated demand in 2020 and will continue to expand in primary markets in 2021. Atlanta, Phoenix, and Chicago recorded large land purchases where new facilities will meet cloud demand.
2. Despite initial slowing and leasing backlogs amid the pandemic, enterprise colocation demand picked up in the second half of 2020
While cloud demand thrived in 2020, enterprise level demand slowed as overall IT spend declined globally. According to Gartner, overall IT spend declined by 5.4 percent due to the pandemic’s impact on organizations’ budgets. However, re-entry and vaccination rollouts could lead to a strong rebound in 2021 as cloud migration keeps momentum.
3. M&A activity and operator investment remain robust
Investment activity has grown on several fronts. It has increased on a speculative basis where cloud demand has been strongest, secondary markets where cloud demand has increased, and new international markets.
Total YTD returns by sector, as of November 30, 2020
4. 5G demand expected to burgeon in 2021
Communications service providers are prioritizing spend on 5G capabilities. While Gartner projected that overall infrastructure spending would decline by over four percent in 2020, 5G was projected to nearly double.
5. Sustainability not slowing down
Customers continue to demand green solutions from operators to help achieve their goals of 100 percent renewable energy. Some estimates forecast the global green data center market to grow by nearly $45 billion by 2024.