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Home News

AI Growth Drives Data Center Boom

August 21, 2024
Reading Time: 2 mins read
in News

The rapid growth of artificial intelligence (AI) and the increasing demand for cloud services have fueled a significant surge in data center construction across North America. According to the CBRE North America Data Center Trends H1 2024 study, there has been a 70% rise in construction within the past six months, resulting in a record-breaking 3.9 gigawatts of power consumption since August. This expansion is driven primarily by the need for additional computational power, especially from public cloud providers and AI companies, who continue to require large-scale data processing and storage capabilities.

Major markets in the United States, such as Northern Virginia, Dallas-Ft. Worth, Chicago, Phoenix, and Silicon Valley, have seen substantial growth in data center installations. In the first half of 2024 alone, over 500 megawatts of new data centers were installed across the US and Canada. Secondary markets, including New York, Atlanta, and regions in Texas, have also experienced increased activity, with “under-construction” data centers quadrupling in size from a year ago. Power shortages and delayed infrastructure, however, have emerged as key challenges, prolonging project timelines.

Power availability has become a top concern for site selection, forcing companies to lease space years before construction completion. Environmental concerns, such as water consumption for cooling, have also intensified as data centers increase in number. In some areas, such as Virginia’s “data center alley,” water usage has surged by two-thirds over the past five years. These growing demands have led to bidding wars for suitable sites with access to sufficient power and fiber, driving up leasing prices and costs for established centers.

As established data centers struggle to meet rising demand, vacancy rates have dropped to an all-time low of 2.8%. Smaller markets, such as Northern Indiana, Idaho, Arkansas, and Kansas, are expected to see more development as companies seek new locations with available power. The financial sector has also grown due to increased data center investments, with large amounts of capital required for leasing, land purchases, equipment, and construction. This surge in data center construction is expected to further shape the digital infrastructure landscape in the coming years.

 

Reference:

  • North America Data Center Trends H1 2024
Tags: AIArtificial IntelligenceAugust 2024CBRECloud ServicesCyber NewsCyber News 2024Cyber threatsCybersecurityNorth AmericaUnited States
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