Artificial intelligence (AI) is anticipated to bring about significant changes in the data centre industry. In recent years, AI has been implemented to simplify the daily operations of data centre services.
According to a survey conducted by Uptime Institute in 2022, 57% of data centre owners have faith in AI to make operational decisions, which is a 20% increase from the previous year.
Jonathan Kinsey, global and EMEA Lead for data centre solutions at Jones Lang LaSalle (JLL) says that AI truly stands to be the most transformative thing for the data centre industry. He expects there to be a “democratisation” of sorts, meaning reducing the barriers to using AI, thus making it more accessible.
Kinsey is keen to note that AI has an impact both at an asset level and a scale/volume level whether that be across national or international infrastructure.
“Or whether that be across how it is being considered at a government policy level across different nations because AI is increasingly about how a nation can stay competitive in a global economy,” he says.
This, Kinsey believes, is highlighted by the vast investments into AI and its development.
Taking the UK as an example, the AI market in the country is valued at over US$21 billion and is estimated to grow to over $1 trillion by 2035 according to the International Trade Administration.
Despite those huge numbers, the UK is still only the third largest AI market in the world after the US and China.
In 2022, the UK Government published its National AI Strategy and Action Plan outlining a package of over $1.3 billion of support for the sector. This support complements and leverages the $2.8 billion that the UK Government had previously invested in the technology.
“There will be a competitive advantage to those who invest in AI and the infrastructure required to service it,” Kinsey says.
Moving forward, Kinsey believes that AI will present significant opportunities for investment, but this will be in an increasingly complex market that presents many challenges.
He thinks the data centre industry is still relatively immature because of the relative early stages and evolution of the business structures, and the scale of some of the operating businesses.
As for how AI will directly impact data centres, Kinsey says the technology will impact the design and scale of data centres – and that relates to new builds as well as the existing stock of data centres.
A report from the JLL published on January 18, 2024, indicates that the primary focus for data centres with regards to AI lies in the rack densities, or the amount of power the equipment within a server rack uses.
Companies that operate data centres have ramped up rack densities from 3 kilowatts (kW) a decade ago to the current average deployment of 10kW per rack.
Still, the report says, that is barely sufficient for AI and high-performance computing, which require rack densities of up to 100kW per rack.
The report goes on to indicate that data centre demand is on the rise. In the first nine months of 2023, investors spent $2.2 billion in data centre deals in APAC, which is just $100 million short of the full-year volumes record in 2022.
Capacity is increasing as operators press forward to satiate the appetite for more data.
An opening for diversity
Yet, there is an issue, according to Kinsey. “There simply aren’t enough people with experience to satisfy that growing market.”
“There's not just a need for more people, there’s a need for different thinking and different skills.”
This, Kinsey says, presents an opportunity for the data centre industry because there is a lack of diversity in an industry that is changing daily.
There is also a far greater need within the industry for partnerships and joint ventures as investors and operators look for creative solutions to source capital, power and land. Kinsey points to the CyrusOne partnership with Japanese energy firm KEPCO, worth around $7 billion to develop new data centres across Japan.
The joint venture is a 50/50 partnership called CyrusOne KEP and will combine the expertise of the former in the data centre space and the latter in utility power and digital infrastructure.
Kinsey wonders if this will create a trend moving forward given that that power constraints have been one of the major problems for key players operating in the space and working with a power company, HELPS mitigates that to a large extent.
“If I think back to my point about the relative immaturity of the industry, [the major players] will need to scale for success to make the best returns and the biggest impact they can in this space,” he says.
Moving back onto the topic of recruitment, Kinsey echoes the sentiment of many working within the space that the data centre industry needs to place a profound focus on recruitment.
He points to the Digital Futures Programme run by the University Technical College (UTC) Heathrow, which the JLL is part of that trains young people as engineers to build out digital highways and data centres.
“It’s a scheme to educate and bring the data centre industry to life and make people early in their careers aware of it as an opportunity,” Kinsey says.
Because of the specialist nature of the industry, Kinsey says work across it must be cross-pollinated with different ideas and thinking.
“We have different people from different backgrounds and that creates healthy friction,” he says.
Kinsey appreciates the diverse workforce blend and its positive impact on the market. He believes in leveraging this environment to promote innovation and scale the industry for success. Moving forward, Kinsey holds the belief that to build on the existing industry's success, it is essential to embrace partnerships, diversity, and innovation.
