A recent announcement by Vantage Data Centers revealed plans to expand its global capacity by over 3 gigawatts, thanks to a partnership with digital infrastructure investor DigitalBridge Group and technology investment firm Silver Lake. This move comes in response to the increasing demand for artificial intelligence (AI) capabilities from major tech companies like Microsoft, Google, Oracle, and Amazon Web Services.
The expansion efforts, which will cost around $30 billion including debt, aim to meet the surging demand for AI computing power and cooling in the data center industry. AI has become one of the most rapidly adopted business technologies in history, prompting what some experts are calling an “arms race” among leading tech companies.
Before the AI boom, data center deals typically involved single locations providing 20 to 50 megawatts in capacity. However, Vantage has witnessed a significant shift in recent years, with deals now ranging from 100 to 500 megawatts, specifically dedicated to supporting AI for customers.
According to datacenterHawk, companies in North America leased 2.4 gigawatts of data center capacity in the first three quarters of 2023, with an expected increase to over 3 gigawatts for the entire year. This high demand has resulted in double-digit rent increases for data centers, outperforming other commercial property sectors struggling with declining valuations.
Despite the challenges posed by high interest rates, data center values have been offset by rising rents. Investment firms like Blackstone and PGIM Real Estate have recognized the potential in the data center industry and have participated in its boom. Shares of real estate investment trusts (REITs) focused on data centers saw a 30% increase in 2023, surpassing the industry average of 10%, according to Green Street.
Vantage’s expansion plans are supported not only by DigitalBridge but also by Silver Lake, which founded the company in 2010. As AI continues to play a crucial role in various industries, including Silver Lake’s portfolio companies, the importance of investing in data centers has become imperative.
While data center operators face obstacles related to concerns surrounding AI’s impact on privacy and job security, the continued growth in this sector is expected to support the broader process of digitization. Vantage’s latest endeavors demonstrate the significance of data centers in the ongoing AI arms race among major tech players.
The source of the article is from the blog meltyfan.es