The pandemic revealed the data center industry’s resiliency and importance to the global economy. As of November 30th, data center REITs yielded 17.2 percent in returns. With millions of people working from home, attending online schooling, shopping online, and gaming, there was immediate demand for data center capacity. Stay tuned for our full report with local market statistics and fundamentals in Q1 2021.
JLL identified five key themes in the year-end of 2020:
- Insatiable cloud demand across the globe In North America, cloud dominated demand in 2020 and will continue to expand in primary markets in 2021. Atlanta, Phoenix, and Chicago recorded large land purchases where new facilities will meet cloud demand.
- Despite initial slowing and leasing backlogs amid the pandemic, enterprise colocation demand picked up in the second half of 2020
While cloud demand thrived in 2020, enterprise level demand slowed as overall IT spend declined globally. According to Gartner, overall IT spend declined by 5.4 percent due to the pandemic’s impact on organizations’ budgets. However, re-entry and vaccination rollouts could lead to a strong rebound in 2021 as cloud migration keeps momentum. - M&A activity and operator investment remain robust
Investment activity has grown on several fronts. It has increased on a speculative basis where cloud demand has been strongest, secondary markets where cloud demand has increased, and new international markets. Click to read more at www.www.us.jll.com.