The global data center sector is undergoing rapid expansion, driven by the surging demand for artificial intelligence, cloud computing, and digital services. Hyperscale data center capacity is increasing, with a significant portion tied to AI-specific infrastructure. These AI data centers require more power and cooling due to dense GPU-based architectures.
The growing demand for data centers has led hyperscalers to shift towards large-scale AI campuses with capacities of up to 5 GW. These campuses are strategically located near low-cost power generation sources, such as nuclear or renewable energy plants. However, rising energy demands are a major concern, with data centers exploring ways to reduce their environmental impact.
Developers of data centers face growing financial risks due to high upfront investments and uncertainty around future computing demands. The industry is also experiencing supply chain disruptions due to rising trade tensions and tariffs, which are increasing costs and causing project delays.
Despite these challenges, the global data center market is expected to grow, with some scenarios predicting a 5% to 20% annual growth rate, depending on the development of new power generation. Hyperscalers are opting for remote locations with access to low-cost power, despite higher construction and operational risks.
As the demand for data centers continues to rise, developers must consider long-term lease renewals and potential capital upgrades, as tenants may not need the space beyond their original 10-to-15-year lease. The industry's growth will likely be shaped by the need for sustainable and efficient data center operations.
