Almost everyone today understands that technology continues to expand rapidly. Driving that technology are data centers. With their storage and networking equipment, these facilities store, process and distribute digital data that supports everything from complex medical procedures to online shopping.

The growth of data centers is accelerating due to increasing demand for data of all kinds. JLL’s just-released “2026 Global Data Center Outlook” brushed off the crystal ball to determine the future of this exploding CRE niche.

The Drivers of Demand

It’s assumed that the phenomenal growth of the sector is due solely to artificial intelligence. The report noted that AI could account for half of all data center workloads by 2030. Additionally, “a significant shift is anticipated in 2027, when inference workloads could overtake training as the dominant AI requirement,” the report’s authors pointed out.

However, Sean Farney, JLL Vice President, Data Center Strategy, said that AI hasn’t been the sole driver of data center demand. It’s just the most visible one. “AI is simply the ‘icing on the top’ right now, as we have an industry that was already growing at double-digit CAGR,” Farney told Connect CRE. AI’s high visibility on Wall Street is supporting the increase of dense GPU facility builds and their accretive growth, he added.

A Plethora of New Data Facilities

The report stated that nearly 100 gigawatts (GW) of new data centers are expected to come online between 2026 and 2030, doubling the global capacity. This means that, by 2030, the total global data center capacity is expected to be approximately 200 GW.

The challenge, however, is project delays, with the average lead time for data center equipment at 33 weeks, a 50% increase from pre-2020 levels. Meanwhile, the build time for a 50 megawatt (MW) center is 18 months.

“That lead time is the highest for transformers, generators and chillers, with some regional variability,” Farney added.

Some developers are attempting to cut the construction time by holding six to 12 months of strategic inventory. Furthermore, “leaders in time-to-revenue have been working closely with supply chain partners to share commitment and risk on the manufacturing side to drive delivery times down,” Farney said.

Then there are modular systems and micro data centers.

Farney explained that the data center industry has employed modular concepts since 2008, when Microsoft bought the first hyperscale container center. Since then, “chiller plants, electrical line-ups and even data halls have been designed and deployed in Lego block chunks,” he said.

Modular builds mean more megawatts can fit into less space, meaning “we’ll undoubtedly leverage what we’ve learned along the modular journey to spin up facilities across smaller, more broadly distributed locations,” Farney commented.

The Sector Expansion and Power Needs

The JLL write-up indicated a CAGR growth of 14%. But that growth will require power, which is one obstacle to data center development. Farney said that JLL reports an average wait time for grid connectivity of approximately four years.

To significantly reduce that gap, data center operators are exploring innovations, including co-located battery storage, natural gas, and direct funding of energy generation.

Then, there is renewable energy.

“Because of general constraints on large blocks of grid power, all forms of backend power are now acceptable for operators,” Farney said. Solar and wind energy are viewed as potential power sources, but they have limitations, including the unpredictability of the current and the lack of mass storage. As a result, “the utility must be the off-takers of these sources for immediate use,” Farney explained.

The Infrastructure Investment Supercycle

Given the growth of data center development, the report forecasted that expenditures over the next five years could approach $3 trillion, meaning “that we are in the midst of an infrastructure investment supercycle.” Data centers are becoming larger and more expensive to build. On the positive side, the barriers to entry mean speculation is declining, while viable projects are stepping up.

Farney said the supercycle and its extraordinary capital spending are “a result of a long pipeline of demand and critical load commitment from the largest, most financially stable companies in the world.” For one thing, Microsoft, Google, Amazon, and Meta are collectively responsible for over $500 billion in annual data center investment.

Then, in 2023, Brookfield Infrastructure Partners and the Ontario Teachers’ Pension Plan acquired Compass Data Centers for $5.5 billion. “This acquisition made it clear that data center investment risk was being embraced by capital markets from a risk perspective, and ever since, every segment of funding has been piling into the space,” Farney noted. 

Mitigating the Risks

The development of and investment in data centers come with plenty of risk. To that end, the report listed priorities for corporates (including securing power early on in the process, designing flexible facilities and building risks into deployment plans). Additionally, investors may want to consider prioritizing AI-capital and retrofit-ready assets, as well as investments ahead of regulations, and planning earlier exits via recaps.

Even with the risks, delays and challenges of data center construction and operations, the facilities have become necessary to handle the data that supports everyday activities and lives. “Behind all the numbers, cool tech and amazing growth, we should all appreciate the key role that data centers have in making our lives easier, safer and more enjoyable,” Farney said.

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