Cushman & Wakefield RETHINKING: The Shape Of Real Estate 2040

In the corporate world, cloud computing has also taken centre stage with virtual storage replacing filing cabinets in many instances. Supercharged by the pandemic, the rapid scaling up of remote and hybrid working has also had a material impact on data volumes. Looking ahead, the impact of artificial intelligence (AI) also promises to multiply data demands alongside the rolling out of the ‘internet of things’ in an ever more connected world. While the impacts on data centre floorspace have been relatively modest between 2005 to 2023, equating to an increase of 1.5% per year, the densification that high performance computing is bringing suggests that demand for data centres will see considerable growth in terms of power consumption principally but also in floor areas required in the years to come. Between 2023 and 2040, we forecast that demand for data centre floorspace will increase by 98.9%, amounting to a requirement for an additional 16.3 million sq ft of space. This takes into consideration expected improvements in energy intensity, assuming that the average power per rack will increase significantly with technological improvements.

As well as in scale, the data centre landscape is also likely to evolve in terms of distribution. Edge data centres – those located nearer to the point of consumption, improving performance and lowering latency and operating expenditure – are likely to increase around high density residential and business locations. Additionally, improvements in fibre optic efficiency may mean that location requirements for data centres become less stringent, meaning they can be placed in cheaper locations where land availability is higher. International demand for UK data centre capacity is also likely to continue, leveraging the UK’s strong fibre connectivity.

The challenge for data centre real estate demand is not projecting if there will be growth, but rather where the ceiling to demand will be. One critical factor to consider is the ability for the intense power consumption needs of hyperscale data centres to be met amid rising demand from across much of the economy. Delivering enough sustainable power in the right locations will be crucial to ensuring the demand within the sector can be met over the long term.

RETHINKING: THE SHAPE OF REAL ESTATE IN THE UK

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CUSHMAN & WAKEFIELD