Cost model: Data centres

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Data centres have become vital infrastructure, but as their importance has grown, so too have their size, security threats and carbon output

01 / Introduction

The world used to run on oil – now it runs on data. With 4.66 billion active internet users globally, each generating an average 1.7Mb of new information per second, data centres are one of the fastest-growing and most important components of the global economy. As more of the world’s population comes online, and with the advancement of smart technologies such as AI, the internet of things, cryptocurrencies and autonomous vehicles, this growth will only accelerate.

By 2025 data usage is projected to have increased tenfold on 2018 levels. To cope, more data storage space is needed. This is leading to a boom in data centre new-build schemes, with construction set to expand by nearly 10% per annum between 2018 and 2025 – creating major opportunities for investors in this alternative, rapidly expanding asset class.

Demand for new data centre construction is primarily being driven by the global move to cloud computing and storage. This has created a need for the hyperscale data centre as owned and developed by the likes of AWS, Microsoft and Google. Co‑location facilities continue to provide variable amounts of data centre white space to other client tenants, as well as providing these cloud giants with facilities on a wholesale basis. Enterprise (owner-operated) data centres still exist, but a high proportion of development is within the hyperscale market as most companies and individuals use this for computing and storage.

Data centres provide a secure and resilient operating environment for IT equipment, and are used to access, store and process data. Although essentially industrial buildings, data centres are highly functional, and their design requirements are changing quickly – not least when it comes to meeting strict carbon reduction requirements and providing adequate cybersecurity.

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