WHO NEEDS DATA CENTERS?
Location and the AI Revolution
Do you have cloud storage? You use a data center. Do you play games on your phone or computer? You use a data center. Do you watch streaming services? You use a data center. Do you rely on Amazon's same-day delivery? Thank the data centers that support Amazon's high-speed fulfillment services. Do you enjoy irony? The graphic above, shared on Facebook, was probably created using AI and is stored in a data center.
The Quest Technology Management blog tell us "a data center is a facility that houses the computing infrastructure powering modern businesses and technologies. It is the heart of data storage, processing, and distribution, enabling companies to deliver reliable services. " Essentially, they are complex industrial buildings filled with computer servers/storage and networking equipment that operate 24 hours a day. They need reliable power access along with environmental recycling that prevents overheating of state-of-the-art technical equipment that run around the clock. Some existing buildings can be refitted to suit specific high-tech needs but most current interest is in constructing specialized properties.
Developers want to build in the US because it is the highest bandwidth-consuming country in the world; North Americans use 50% more broadband than Europeans, per capita. A 2021 study from Cartesian gives a concise summary of household use five years ago. Pew Research finds that a growing number of American households rely on internet/broadband and nearly a third of young adults are "smartphone dependent". The closer data-managing companies can get to consumers and businesses, the lower their operating costs. Promising growth trends has IT giants signing $850 billion worth of to-be-built data center leases.
New technology brings risks. Politicians, news feeds and social media tell us that data centers increase electricity prices, require cooling systems that put local environments at risk plus become the source of late-night noise and traffic that disrupts the local area. Supporters extol potential jobs; detractors acknowledge that construction workers are needed during project development but ask how many humans will be employed once a center is built. As the opponents fight, delays in needed telecom infrastructure that would be part of data center development may overburden wireless transmission networks, degrading our ever-more-essential internet service. With or without data center construction, wireless use rises annually, pushing existing limits.
Data centers provide an early case study of AI-related factors that will influence value. For many commercial users, their support will be a calculation that measures revenue and expense benefits against higher utility costs as well as possible local assessments for measures that mitigate environmental impacts and buffer neighboring area impact. Homeowners face more complicated and subtle judgements, not as easily converted to dollars. In regions that put high value on open space with either agricultural potential or views and recreational opportunities, change brings risk to an established way of life. For "smartphone-dependent" residents of more densely populated communities, especially those who work remotely, lack of change brings lifestyle risk if lagging infrastructure development makes wireless/broadband speeds less reliable.
The fact that we can see and walk through real estate gives it an elusive impression of permanence and value stability. Changes that influence users' costs, needs and preferences will challenge this. Count on the AI revolution to introduce unprecedented trade-offs.