In 2024, we saw excitement expand across the tech industry, exacerbated by the transformative potential of AI and the possibilities that lie ahead for this futuristic innovation. This heightened enthusiasm and exploration for new use cases will grow with even more intensity in the new year, shining a massive spotlight on the backbone to the power of AI: data centers.
Serving as the epicenter of everything we do online, the data center industry is central to AI innovation and critical to supporting everyday life. Without data centers acting as the “home” of GPUs, innovation to meet future technology demand wouldn’t be possible.
Although data centers have been operating for decades, they have only recently become broadly recognized. In addition to supporting AI and enabling us all to remain connected in a digital world, data centers encourage business development and job creation, playing a pivotal role in today’s digital economy. More recently, data centers have attracted the attention of a broader swath of the investing community—a notable change, given that just 15 years ago only a limited number of investors and lenders were familiar with the space. Now, data centers have grown to become one of the most popular commercial real estate and infrastructure assets, growing faster than nearly any other asset class, and investors are taking action.
INVESTOR’S EYES ARE ON DATA CENTERS
Not many industries are experiencing the accelerating logarithmic growth curve that we’re seeing with data centers, driven primarily by AI and cloud computing. Knowing that demand for data center capacity continues to grow exponentially, the industry is a bright spot for investors, benefiting from the growth in infrastructure capital availability. Over the last two years, PE data center investments reached record highs, as data centers now form 40 percent of the total target investment for more than 50 global real estate funds at more than 20 billion USD.
