The rise of data centres in a post-Covid world

Covid-19 has caused a dramatic shift in the way many people work, with many companies forced to shift to working from home, resulting in a huge surge in demand for cloud services. A year later, with many businesses planning to continue remote working for the remainder of 2021, or, in some cases, permanently, our reliance on data centres is becoming clear, and subsequent investment in the industry is increasing.

Covid-19’s effect on the data industry

While remote working has become increasingly more popular and widespread over the last ten years, the first nationwide lockdowns in Europe at the beginning of 2020, was the first time most businesses were forced to adopt it immediately, across their whole business. All workers requiring access to their work systems and software remotely at the same time, resulted in reliance on broadband and data infrastructures on a scale that has never been seen before.

Unsurprisingly, the effect of this has been a drastic spending increase in the data centre market, as more service providers invest to build bigger and more efficient centres to meet increasing demand. Global spending on data centres reportedly hit £23.5bn in the first half of 2020 – more than six times the annual average of previous years(1) and the data centre construction market is expected to grow at a CAGR of 4.8% between 2021 and 2026.(2)

Mega data centres

It is likely that the pandemic will result in some of the largest data centres ever built. The construction of mega and hyperscale data centres across Europe, which offer huge storage capacities, bandwidth and data transfers, will be fundamental in facilitating the remote working revolution.

Property advisor, Knight Frank’s research identified Frankfurt, London, Amsterdam and Dublin, as places where data centre power is expected to exceed 1,000 megawatts over the next three years, with big tech companies including Google, Facebook and Apple setting up their own additional small clusters of data centres in these cities.

Looking to the future

While the increasing reliance on cloud services has been accelerated by Covid-19, there’s no doubt that it’s here to stay beyond the pandemic. In a survey of IT leaders by Snow Software, 66% said they would continue to use cloud services even when employees return to the workplace(3), and they are unlikely to be alone. Now businesses are set up for remote working, and have experienced the benefits, there are many that will never return to the way they worked before. Add to this a rising online population, and the introduction of 5G, more, larger data centre construction projects will be a necessity to accommodate increasing global demand.

Sources
1. Construction News
2.
Global Newswire
3.
Savills