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| Global Surge in Data Center Demand Amid AI Boom Faces Power and Construction Challenges |
Demand for data center space has surged globally in recent months due to the rapid growth of artificial intelligence (AI) technologies, according to new research. Commercial real estate firm CBRE reports that data center operators across North America, Europe, Latin America, and Asia-Pacific are primarily concerned about power shortages.
Large corporations are struggling to secure data center capacity due to construction delays and power challenges that are not keeping pace with the sector’s growth. This has become a significant issue as AI technologies require more data centers than can currently be built.
In North America, data center inventory grew by 24.4% year-over-year during the first three months of 2024, adding 807.5 MW of capacity in major markets like Northern Virginia, Chicago, Dallas, and Silicon Valley. Europe’s data center market also experienced substantial growth, increasing nearly 20% in Q1. Paris, part of the FLAP group (Frankfurt, London, Amsterdam, and Paris), saw a remarkable 40% year-on-year growth.
Andrew Jay, CBRE’s Head of Data Center Solutions for Europe, noted that power and land shortages, combined with increased regulation, are significant barriers to data center development in Europe. Latin America and Asia-Pacific also saw notable growth, with increases of 15% and 22%, respectively. Key cities for investment in these regions include Tokyo, Sydney, Hong Kong, and Singapore.
Increased demand has driven up costs, with North America seeing average asking rates for typical 250-500kW requirements rise by 20% in Q1 2024. Prices in Europe have also been steadily increasing.
Looking ahead, Kevin Restivo, Head of Data Center Research in Europe, highlighted that secondary European markets like Oslo and Madrid are emerging as key investment locations to meet the growing demand.
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