Data centers on high demand, rent increases amid AI race

Thur, 08/22/2024

by Ellie LeTu

Source: WSJ

• Backstory: Data center tolerated low rent growth

  • Tech companies prefer storing data on public cloud to traditional storage.

  • Big cloud providers like Amazon benefited from significant rent discounts, paying nearly half the rate compared to other companies due to their leverage in cloud space.

• Ai race pushes positive rent growth

  • Tech companies poured large investments to AI projects.

  • For AI-related data, data centers are preferred over public cloud due to security and regulatory concerns.

  • Data center landlords can now hike rent prices.

• Concerns on data center extreme high demand

  • Construction timelines are extended due to limitations in construction capacity and ongoing supply chain disruptions.