Data Center Market Moves to the Forefront of Real Estate Strategy [NEW RESEARCH]

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By: JC Pelusi, Market Leader, and Managing Director

The accessibility of big data has already revolutionized the way we do business … and it’s only the beginning.

Gartner predicted earlier this year that, “By 2020, information will be used to reinvent, digitalize or eliminate 80% of business processes and products from a decade earlier.”

As businesses become more sophisticated in the way they manage, store and interpret data, corporate norms will continue to shift. It’s not surprising then that data centers have become key economic drivers—creating new jobs, capital investment opportunities and strengthening surrounding business markets.

In the next five years, the data center market is projected to undergo exponential growth, according to JLL’s newly released 2015 Data Center Outlook. As businesses continue to outsource their IT systems, lease third-party data center facilities and incorporate cloud services, this market will continue to thrive.

Read on for trends affecting data centers and how your business can change its current strategy to align with the shifting market conditions ahead.

Factors Impacting Data Center Market Supply & Demand

Technological advancements and subsequent business practices are having a direct impact on data center supply and demand. Here’s what you should know.

What’s driving demand? 

Companies in the transportation and utility sectors, as well as local governments, have welcomed the benefits that come with the Internet of Things (IoT). Luckily, the IoT is still in its infancy. According to ABI Research the “Internet of things market will grow significantly from 1.2 billion business-to-business connections in 2013 to 5.4 billion connections in 2020.”

How does it relate to data centers? IoT is dependent on the data center market offering secure network connectivity and cloud storage for various devices and programs. Disaster recovery and the need for improved cyber security are also key focus areas for IT decision makers.

Demand

Who are the big suppliers?

Companies with enterprise level data centers are now faced with the challenge to manage costs, regulations, power, software, cooling and other commitments. Google and Microsoft, for example, are at the top of the enterprise data center list.

As the average lifespan of a data center is 20 years, JLL anticipates enterprise data center occupancy will gradually move into the third-party market.

Netflix is one key example of this trend. The company recently announced its plans to close what’s left of its data centers and plans to run all of its IT remotely. This third-party market is made up of colocation companies, providing data center space and IT services.

Supply

What Does It Mean for Your Business?

JLL research predicts that large companies will still allocate resources to existing data center facilities, investing and expanding, rather than building. Looking ahead, both small and large businesses should be looking to lease third-party data space before the second half of 2016. Other businesses will likely follow suit, giving providers more and more leverage as the market continues to tighten.

Not sure how to refine your strategy? Here are a few tips from the experts to get you started.

  • Future-proof your space by allowing for flexibility in facility design.
  • Familiarize yourself with markets that have been labeled “user favorable” in the coming months (i.e. like Atlanta, Austin and San Antonio).
  • Connect with the experts to discuss your options and understand what will work best for your business.

“The health of the data center industry is thriving right now, and that is due to continued investment.” – Bo Bond, Managing Director, Data Center Solutions Group

With the market’s strong current conditions, re-imagine how your business can successfully update its strategy. For more on what’s ahead for data centers, check out the infographic below.

Graphic

Evolve your data center strategy and download the full report today.

About the Author

JC Pelusi_Headshot_webJC Pelusi is an International Director for JLL and works out of the Pittsburgh office.  As the leader for JLL’s Great Lakes region, JC has extensive experience in a variety of areas, including Corporate Account Management and Transaction Services. View JC’s full bio to read up on his experience, or connect with him on LinkedIn

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