5×5 with CompStak: What’s Fueling the Data Center Gold Rush? – A Recap with Ryan Atkinson from JLL

In this episode of ‘5×5 with CompStak’, host Brian Caldwell interviews Ryan Atkinson from JLL to discuss the rapidly evolving data center market. Key topics include the impact of AI on data center demand, challenges related to power supply, the importance of location for future developments, and the increasing significance of environmental considerations such as water usage and renewable energy. The discussion highlights the changing landscape of commercial real estate influenced by technological advancements and regulatory landscapes.

Below are the top takeaways from the episode:

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AI Impact on Data Centers

AI’s integration into business operations has surged, with AI firms significantly increasing their share of office leasing. This growth drives demand for data centers, which are considered essential by many businesses, making them crucial in the evolving commercial real estate landscape.

Power Availability Challenges

A major headwind for data center development is the limited availability of power in key regions, particularly in Silicon Valley, which is expected to face power constraints for up to a decade. This has led operators to seek alternative locations where power supply is more reliable.

Geographical Trends

The discussion highlights the increasing importance of secondary and tertiary markets for data center development as primary markets become saturated. Regions like Columbus, Ohio, and West Texas are becoming prominent due to their power availability, which is critical for large-scale data center operations.

Innovative Cooling Solutions

As data centers become more power-hungry, traditional air-cooling methods are insufficient. New solutions, including liquid cooling and advanced facility designs, are necessary to manage the increased power density of modern servers.

Environmental Regulations

Increasing regulations around water use and noise pollution are shaping where and how data centers are constructed. This is particularly relevant in water-scarce areas where recycling techniques and sustainable practices must be implemented.

Future Market Outlook

The data center industry is entering a transformative phase, driven by rapid technological advancements and changing market dynamics. The demand for greater capacity and efficiency will necessitate ongoing upgrades to facilities and infrastructure.

Security Concerns

With the rise of data centers, security, both physical and cyber, becomes a priority. Effective security measures are critical to protect sensitive data from a variety of threats.

Workforce Implications

Data centers may not create a large number of jobs, but they do require highly skilled workers, particularly engineers, which can enhance job opportunities in lesser-known markets.

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