2016 saw mega-deals from majors players in the rapidly growing data center industry. With new economic and regulatory policy on the horizon and strategic cloud adoption acting as a wild card, the rules of the game are changing, from data center pricing models to location selection. JLL's 2017 Data Center Outlook highlights five major trends over the next 12 months.
Global Economic And Political Shifts Will Impact Data Centers
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The U.S. data center climate will evolve over the next two years, with influence from the new presidential administration and federal mandates for data center optimization. Industry game-changers abroad include the unknown impact of Brexit and operator tax breaks, as well as a continuing push for data sovereignty.
Investors Will Continue To Clamor For Data Center REITs
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Data center REITs are boasting return on investment typically in the 10% to 15% range — impressive, compared with other types of funds that are performing more in the single digits. With demand going nowhere, these firm yields signal another year of bottom-line growth.
Wholesale Pricing Will Become Ubiquitous
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Wholesale pricing has traditionally been the domain of large-scale projects, but with the rise of hyperscale sites, we’re seeing bulk pricing trend downward, too. Retail pricing may be on its way out in 2017 and beyond.
Cloud Adoption Is Pushing Activity To Certain Markets
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We expect to see even swifter movement to the cloud in the industry’s hub markets, from Silicon Valley and Northern Virginia to London and Tokyo. Already, some major cloud providers are anticipating they will need to triple infrastructure by 2020.
Bold M&As Will Continue To Disrupt The Market
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Mergers and acquisitions (M&A) in the data center sector surged in 2016, and should continue through the new year. As the experienced players become bigger, expect less room on the bench for new recruits.
Houston's Outlook
Stream will begin construction on its third data hall in its facility in The Woodlands.
The healthcare industry will continue to evaluate outsourcing data center requirements.
The energy sector will cautiously ramp up its data center space.
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