Data centre capacity constraints pushing demand to new locations
Author: Simon Rowley
AI use is set to require the doubling of hyperscale data centre capacity in the next four years, but while the depth of demand will mean centres will be required in markets around the world, energy infrastructure and grid capacity will mean delivery will be easiest in northern European locations such as Malmo, Gothenburg, Stockholm and Oslo, says Savills.
The international real estate advisor has benchmarked 68 locations around the world to assess the impact of energy constraints in different global markets, given that power capacity tends to be the major limiting factor in data centre development.
With major cities often seeing high demand from competing power needs, it is often smaller cities that will find data centre delivery easiest, especially those which have plentiful renewable energy sources; but “data localisation requirements and an ongoing need for some services to be located close to key markets will continue to drive development even in the most energy-constrained hubs”, comments Paul Tostevin, Head of Savills World Research.
He continues, “However, locations where limitations are fewer and time to market is faster are likely to benefit from the current unstoppable need for more capacity, especially as a cloud-based services such as AI have made site-selection more location-agnostic. We’re seeing some trends in the fastest growing markets being close to those which have limited capacity, such as Malaysia, which is boosted by its role in supporting demand from constrained neighbouring Singapore; a pattern which is beginning to emerge elsewhere in southeast Asia.”
In the US, access to power and limits on grid capacity has become the major constraint on new data centre development. Rick Drescher, Corporate Managing Director and Lead of Savills Critical Facilities in the US, says, “The rulebook of data centre site selection has been ripped up; it now all comes down to where sufficient power can be accessed. In the US, the biggest markets are Northern Virginia, Chicago, and Dallas, but we’re now seeing significant growth in locations such as San Antonio-Austin, and that’s because power restrictions there are less of a factor.”
Scott Newcombe, EMEA Head of Data Centres, adds, “AI is significantly transforming European data centre markets by driving increased demand for processing power and storage capacity. As organisations adopt AI technologies, they require advanced infrastructures to handle vast amounts of data. This surge leads to the expansion of existing data centres and the construction of new ones, fostering innovations in energy efficiency and cooling systems.
“Moreover, with stricter regulations on data protection and sustainability, data centre operators in Europe are investing in green technologies to meet compliance requirements and consumer expectations. Overall, AI is shaping a more robust, efficient, and environmentally conscious data centre landscape across EMEA.”
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