We speak to industry experts about their foresight on the region’s data centre activity and the emerging trends and concerns which could unravel over the next year.
In the dynamic realm of North America’s data centre landscape, 2023 witnessed unprecedented transformation, setting the stage for a compelling narrative for the upcoming year. Although it is only the start of 2024, it’s clear that there is a new wave of growth gearing up to propel the region into new heights.
A common theme among industry researchers such as JLL, CBRE and Cushman & Wakefield, is that secondary markets are expected to continue growing due to constraints in primary markets with power usage and sustainability scrutiny. Some providers in core areas like Northern Virginia are struggling with power demand, which is driving operators and hyperscalers to seek access to necessary land and power to meet surging capacity requirements.
This will inevitably encourage secondary locations to compete with Tier 1 markets, as resources are often less expensive and readily available. Reliability, cost and assurance of services are benefits which may be the tipping point that sees submarkets encounter increased investment and network infrastructure opportunities.
Research from Cushman & Wakefield found that Northern Virginia – the top spot for overall ranking in its previous three reports – now shares the highest rank with Portland. Due to favourable pricing, low environmental risk and more available land, Portland competes with leading areas like Loudon County, where development has paused until 2025.
Other emerging trends come from new technologies driving greater data centre adoption. JLL’s North America Data Center report found that major cloud services providers are growing rapidly to support new AI requirements and the need for more computing power. As these requirements grow, operators will need to adapt their infrastructure to accommodate high power density servers.
Coinciding with the rise of AI and secondary market headway, Edge data centres will become a popular solution due to reduced latency. North America is estimated to contribute 48% to the growth of the global market, according to Technavio. It also states the Edge market is expected to witness a boost from increased digitalisation, automation and IoT proliferation, driving the deployment of Edge data centres to alleviate congestion and enhance service efficiency.
DataCenterHawk’s 3Q 2023 Data Center Market Recap revealed campus developments are becoming more prevalent, as developers are now buying larger tracts of land for longer-term expansion. We have seen similar activity from the end of last year with the likes Digital Realty and Blackstone establishing a joint venture; DC BLOX expanding its portfolio with the recent purchase and commencement of construction in Georgia; and Netrality Data Centers securing a multi-million-dollar sustainability-linked loan to support energy efficient operations.
Despite market movement and power constraints, the North American region doesn’t seem afraid to tackle these head-on and unlock the potential for a rich, industry-leading landscape. It can’t be ignored that wider, more global influences may throw the evolution off-track, yet progress is rarely linear and the preparation for the next 12 months seems promising.
Aron Brand, CTO, CTERA
The North American data centre landscape is on the brink of a transformative evolution.
The emergence of Large Language Models (LLMs) and other Generative AI tools is leading enterprise data centre users to develop and utilise advanced unstructured data pipelines. These pipelines are essential for efficiently processing and securing data that does not conform to traditional database formats.
This shift is driving an increased reliance on LLMs for processing enterprise data, which in turn necessitates significant changes in data centre hardware configurations, including a surge in GPU capacity and the adoption of vector database technologies.
As the utility of unstructured data grows, the importance of unstructured data management, particularly data classification, is becoming more critical. AI plays a key role in organising and safeguarding data, ensuring adherence to stringent privacy and sovereignty regulations like GDPR and CCPA.
Simultaneously, AI introduces new security challenges, especially as it becomes increasingly capable of mimicking human behaviour, thus heightening the risk of social engineering threats. Cybercriminals are leveraging AI tools to devise more sophisticated attacks, capable of autonomously identifying and exploiting vulnerabilities in data centre networks. This evolving threat landscape demands a transition from traditional reactive security strategies to proactive and dynamic defence approaches.
This escalation in threats has catalysed the development of AI-driven security systems, which are becoming deeply integrated into data centre infrastructures in North America and beyond. These AI mechanisms – utilising Machine Learning – excel at pre-emptively detecting and neutralising cyberthreats through sophisticated behavioural analysis, surpassing the effectiveness of traditional, rule-based security methods. The incorporation of AI into cybersecurity defences, especially within storage systems, represents a significant leap forward in data centre security. Employing Machine Learning, these systems are equipped to proactively identify and mitigate cyberthreats, including ransomware and emerging AI-based threats, in real-time, providing a crucial layer of defence.
Holland Barry, Senior Vice President and Field CTO, CYXTERA
As we move into 2024, the data centre evolution that began in 2023 will continue. Among the changes we can expect a few things.
There will be an even greater need for more power for data centre racks. In 2023, this increased need for power happened more quickly than expected due to the rapid rise of Generative AI and higher density deployments, as well as more power-hungry general computing (CPUs) coming into the market. Because rack density will only go up in 2024, even more power will be needed. Data centre providers will need to leverage advanced cooling technologies and consider new design schemes to keep pace with next-generation technology.
That said, while interest in liquid cooling technologies will rise, short-term investments will be modest (for now). Air cooling has its limitations, particularly with high density deployments, yet still meets the cooling needs of many implementations. While the evolution to liquid cooling is certainly inevitable, rapid uptake may still be a few years out due to the upfront investment and complexities involved in deploying these solutions in current data centre infrastructures.
AI will positively impact data centre operations. In 2023, organisations did a lot of experimenting, applying AI to different data sets. In 2024, companies are going to become much more intentional about how they use AI to solve very specific business problems. In the data centre, providers will increasingly use AI solutions to improve operational efficiency and sustainability by monitoring and setting optimal thresholds for factors like temperature, humidity and overall general energy consumption. AI tools can also improve data centre providers’ security posture – and the security posture of their customers – by more proactively alerting customers to security events in the data centre or alerting the data centre NOC and/or SOC to issues relating to network congestion or a potential breach.
In 2023, many organisations experienced the financial pain of having gone ‘all-in’ on the public cloud over the previous few years. Now they’re realising that they must get their arms around it and possibly make some changes, including migrating certain workloads to a private cloud or back to on-premises. Although, while we are seeing a move toward cloud recalibration, given the complexities, it will happen slower than initially expected. What we will see more of in 2024 is while public cloud will continue to grow, adoption will be more selective as organisations increasingly embrace hybrid solutions and cloud-like options, like Bare Metal-as-a-Service (BmaaS), that give them the flexibility and scalability they’re looking for in the public cloud with the cost predictability and control of a private offering.
Bob DeSantis, CEO, 365 Data Centers
In 2024, the relentless growth in data generation is set to continue its upward trajectory. It is becoming imperative for data centre facilities across North America to have the ability to store and transport both existing and incremental data that is poised to surge in the coming year, making the need for interconnected data centres paramount. Data centres are transcending their role as mere colocation facilities to serve as integral components of the digital ecosystem. This evolution is reshaping the data centre market as providers expand into more diverse capabilities such as interconnection services and cloud networking.
Colocation, at its core, is comprised mainly of space, power, cooling and cross connects. However, we can expect to see a paradigm shift in the realm of interconnected facilities. What sets this type of data centre platform apart from traditional data centres is the ability to seamlessly transport data across an interconnected backbone network. The importance of interconnected facilities will escalate as we progress into 2024, playing a vital role in navigating the evolving digital landscape which will see daily data consumption continue to rise and the impact of AI manifest itself on multiple levels.
The trend towards network-centric colocation represents a new strategic approach to data centre infrastructure investment, prioritising both connectivity and interconnectivity. It will become crucial for data centre customers to discern the positioning of a data centre operator regarding its ability to provide interconnectivity between its data centres and offer diverse connectivity options within and beyond the data centre. As businesses increasingly integrate next-generation applications, data centre operators must possess both colocation and network scalability to meet the evolving needs of their customers.
Advancements in technology, coupled with an escalating demand for seamless data centre exchanges, propel the relevance and value proposition of network-centric data centre facilities. Deployments at these facilities are becoming paramount for both small- and medium-sized enterprises and large enterprises alike. Interconnected colocation facilities are uniquely qualified to provide enhanced reliability, scalability and support for emerging technologies such as Edge Computing and Artificial Intelligence (AI) by also offering diverse and redundant connectivity options. Looking ahead to 2024, network-centric data centre facilities in North America will serve a cross-section of industries as well as public sector applications.
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