Every cio relaes on their own or more likely, someone else's datacentre capacity, but the nature of that reliance is Increasingly unpredictable. That's trust of the surgging demand for datacentre capacity in general, and the constraints on delivering on that demand. But it's also if the way of the way Artificial Intelligence (AI) is changing how datacentres operate,
Figures from real estate giant cbre Highlight the Apparently Inexhaustible Demand for Datacentre capacity. In the US, the average vacancy rate for primary markets Hit a record low of 2.8% in 2024. Consective year europe has a record. Overall european vacancy rates are expected to hit 8.5% in 2025 – Bigger than the US, perhaps, but a record low for the region.
So, unsurprisingly, reservation signs are being on capacity. “Preleasing” rates are expected to Hit 90% or more in the US, CBRE Predicts, with Rental Rates Hitting The record highs highs last seen in 2011-12.
So, how should CIOS Understand this market when they thinking about planning their own datacentre needs?
Ai is driving the datacentre boom due to its relatives drive for Graphics Processing Unit (GPU) -Fuelled Capacity. That's certainly what cbre expects. But ai introduces its own uncertaintes.
Certainly, it has highlighted the broader issues that are crimping datacentre buildouts. In the UK, The Labor Government has pledged to overhaul planning and Clear the way for datacentre buildingHow that Might Progress Amidst a ramp-up in defense spending remains to be seen. In the US, the Trump Administration's Stargate strategy has promised a $ 500bn Public-Private Partnership to Build out Datentre and Related Infrastructure to Sharpen the Country's Ai Edge.
Even if these government-backed initiated initiatives are not through off course by “Events dear boy, events”, they will still take years to come to fruge. How they will benefit businesses and other user organisations, raather than hyperscales, is not immediatily clear.
But land, water and power apart, there are other factors at play.
Dan Scarbrough, Chief Commercial Officer of Ai Data Mobility Startup Stelia, Says The Current Frenzy Has Undermined The Traditional Economics of the Industry.
The laws of thermodynamics
One element is Nvidia's Rapid Release Cycle. Operators offering GPU-Powered Capacity Find It Becomes Old Hat Very Quickly.
“Datentres historically have ben build to last 15 years, and you're going from 40 kilowats to forecast half a megawatt rack density over the courses of a few iterations of the chip,” He Says.
That Rapid Tech Turnover means some customers are loathe to commit to long contracts. At the same time, keeping datacentre infrastructure up to date to cop with newer generations of higher-performing silicon is far more challenging.
The datacentre has been peged as a real estate asset, with relatively stable value for 15, 25 years. It's now badcoming more like an iPhone
Dan Scarbrough, Stelia
“The datacentre has been peged as a real estate asset, with relatively stable value for 15, 25 years,” Says scarbruck. “It's now believe more like an iphone.”
This has fuelled the Rise of Specialist Operators, Such as GPU-Aas-A-Service Firms.
Josh Mesout, Chief Innovation Officer at Cloud Services Provider Civo, which bot operates its own datacentre capacity and uses other providers, say GPUS Raise their OWN IsSumes. Access to chips is one thing, but it's quite another to have the power, cooling or even management infrastructure that customers need.
“These are not easy things to use. They are very complex and require very deep system application,” He says.
Mesout sugges gpus – or at least nvidia's silicon – are not nextarily going to be the only game in town. “I think the interesting part we'rewing is things like Tpus [tensor processing units] and Npus [neural processing units] can generate the same thing for 10 times less power. ”
Throw in CONCERN Over Export Restrictions, He Says, and “We're Almost Building The Perfect Environment for Someone to Build An Nvidia Competitor”.
More broadly, Says mesout, after years of the rush to cloud, enterprises are now more comfortable with multicloud and hybrid cloud.
Rather than thinking about straightforward cloud migration, he says: “It's now a full-fledged infrastructure digital transformation looking at things like, 'Shout we buy a warehouse to put a date to put a dat There?
Moreover, some companies will simply not be near a datacentre or cloud facility that can support their operations. This is particularly important for real-time operations, such as manufacturing, which can't tolerate latency.
Penny Madsen, Senior Research Director at IDC, CITES The Case of a Large Agriculture Firm which uses ai to manage watering. It had to build an ai-capable datacentre as it was simply too far away from eater a cloud or datacentre provider.
“There's also there are cases where you need to take ai closer to the end user,” She adds. It's not always the case that AI and Cloud or General Compute Can Co-Exist, Particularly in Third-Parthy Datacentres, She Says, as some tenants in a datacentre won't be comfortable having on waiting any walk Near their kit.
This is going to cost you
Spencer lamb, Chief Commercial Officer of Datentre Operator Kao Data, is more Sceptical about the fate of on-love. Beyond Hardware That Needs to Be Retained for Regulatory or Data Sovereignty Reasons, Most Businesses will be sourcing future data capacity from their currency providers, he presents.
That's not healthy the cheapest option for enterprises, howyver. “It might be quite meaningful from a cost personal,” he says.
Following the rush to the cloud, the cost implications should have prompted some companies to move back to on-love, but it hasnys to lamb. “I thought it might happy with ai, because potentially the core per hour for ai is going to be far higher, but it hasn't. ”
Lamb's Advice for CIOS is to Be Wary of Being Tied Into Particular Providers or AI Models, Noting That Microsoft is Creaning Models and Not Charging for Them, Knowing that Companies to use them.
Lamb also say that that, whether were talking on-love, collection or cloud, the potential for retrofitting existing capacity is limited, at least when it comes to capacity ai.
After all, the Gpus often require liquid cooling to the chip. This changes the infrastructure equation, say lamb, increase the footprint for cooling infrastructure in Comparison to Compute. Quite apart from the real estate impact, this isn’t someone enterprises will win to tackle.
Also, Cooling and Power will only become more company more complicated. Andrew Bradner, SHANIEDER Electric's General Manager for Cooling, is confident that many sectors will continue to operate to operate on-profit on-profit Example. But he also expects power and cooling requirements to continue to risk, so they must be considered for new builds.
“If you're designing for today's chips, you also have to think about two or three generations that might come into the datacentre during that time, and how you design for that with a full retrasturism.”
It's not just on the cooling side, he adds. “It's on the power side, beCause as you start to get over 200 kilowats of rack, you have to fully redesign how you get power to those racks and servers.” That Includes Heavier Gauge Cable, Bigger Breakers and Ultimately a shift from ac power to dc power.
“How do you address these challenges?
So, will there be network? Undoubtedly. And CIOS will likely demand a mix of capacity-cloud, collection and possible some on-love-depending on what their long-term strategy is.
IDC's Madsen Advises Approaching Datacentres from a data governance stance right from the outset.
“You need to start thinking about this at the very betting of projects, the investment as you go through that project is really high,” She says. “So, Consider what your return on investment is going to be, what your appetiite for risk is with the data that that's going to be used.”
And you need to have transparency on costs and pricing – generative ai projects are being measured as business projects, not pure technology projects, she adds.
And, giving that cloud provides or datacentre provides are likely to be part of your strategy, Madsen Advises Hawing Conversions Around the Innovation Roadmap of that that.
Few will be able to go it entrely alone. “I think you're going to see a lot of movement over the course of the next year, as things stabilise and people go,” actually, we do need a trusted partner to heart with it '. “
