A new report from a real estate firm that specializes in data center construction and leasing says data center construction in North America is up 43 percent over the same period in 2016, and industry consolidation has driven $10 billion in mergers and acquisitions (M&A) so far.
Jones Lang LaSalle just published its report on the North America data center market, highlighting trends such as consolidation, enterprise hybrid cloud, security, and high-performance computing.
While construction continues at a record clip, the report also found that absorption of data center space available for lease has returned to normal levels after record leasing in 2016. So many of the cloud providers are still digesting the capacity they picked up last year.
“While M&A activity is surging, data center leasing has quietly returned to normal in the U.S.,” Bo Bond, managing director and data center solutions co-lead at JLL, said in a statement. “The acquisition of large amounts of server space in the U.S. by cloud companies continues, but it is no longer as frenetic as it was in 2016. Data center users are now turning their attention toward filling out their global data center footprint and making technology investments to keep them ahead in a rapidly changing industry.”
The 43 percent increase in data center construction is enormous. Data centers under construction last year totaled 353MW in capacity, compared with 506MW for the data centers currently underway—and the year isn’t over.
Where IT departments will spend their money
JLL analysts asked IT pros where they will be spending and focusing their IT budget today, as well as how they expect to see it changing over the next 24 months. They cited three trends: Tech & Big Data, Transaction & Payments, and Online Retail.
One company said its next step will be to start to focus on moving virtual machines (VM) to non-SAN (storage area network) products. It will still have SAN arrays for databases, but it is no longer required for VM environments.
Another said its current IT budget is focused on commodity-based computing hardware and will continue to be the case while it works to standardize its hardware to drive higher performance and reduce costs.
Finally, one firm said IT spending will be focused on core segments: availability of deployments, security of data and infrastructure, technical debt, and growth in automation capabilities.
JLL analysts found some interesting on-premises trends as well. Among them:
- High Performance Computing (HPC) is becoming a more cost-effective solution than the public cloud for some big data applications.
- Newer processors generate so much heat that some older data centers are being rendered obsolete and are forcing the design of new data centers.
- Companies are expecting to work with specific AI-designed processors to automate more tasks.
- Security upgrades require more rack space than before, increasing the wait time to get new products deployed.
On-premises data centers still important
This shows that the on-premises data center remains viable and important, despite all the hyper that everything is moving to the cloud. But the shape of the on-premises data center is changing. Workloads are changing and so are the types of hardware deployed.
The most intriguing finding is that new CPUs generate so much heat that old data centers are obsolete. I know the new Epyc processor from AMD is monstrous. Literally, it fills the hand of a person holding it. Which make me wonder: Is CPU technology reversing the trend of smaller and lower power?