Commercial Real Estate News
Global Edge Data Center Market to Hit $300 Billion by 2026
Real estate consulting firm JLL predicts a significant increase in data-dependent technologies like the Internet of Things (IoT) and generative artificial intelligence (AI) will drive the need for robust IT infrastructure, particularly in the form of edge data centers.
According to JLL's analysis, the market for edge IT infrastructure and data centers is expected to reach $317 billion globally by 2026, a 107% increase from the 2020 valuation of $153 billion.
JLL defines edge data centers as facilities that bring computing power closer to where data is generated or consumed. The global growth of edge computing will be driven not only by emerging technology megatrends but also by the need for faster data transfer and higher computational power, along with factors such as regulatory policies. From an infrastructure perspective, organizations are turning to edge data centers to process and analyze data in real-time at the network's edge, enabling faster decision-making and more efficient operations.
The expansion of edge IT infrastructure is expected to parallel the growth of IoT devices, which JLL forecasts will grow at a compound annual growth rate (CAGR) of 9.8% over the next five years. A 2023 survey of data center professionals cited by JLL revealed that the need for low latency and high bandwidth (41%) is the primary driver for edge data center deployments, followed closely by concerns over data security and privacy (38.3%).
The demand for improved products and services, such as low latency, high computing, generative AI, and ubiquitous connectivity, is likely to sustain a healthy cloud environment and foster the future growth of edge data centers. Regions like Asia Pacific (APAC) and the Middle East North Africa (MENA), where internet and mobile penetration are rapidly increasing among rural populations, are expected to further support opportunities in the edge data center market. In the United States, 21% of data center development is currently focused on edge locations.
Jonathan Kinsey, EMEA Lead and Global Chair of Data Centre Solutions at JLL, emphasized the importance of edge data centers in adapting to transformational technologies. "Without the distribution of data processing and storage across various locations, cutting-edge efficiencies and solutions like IoT and generative AI will not achieve mainstream acceptance," he said. "Edge data centers will be critical for ensuring seamless business operations in the future economy while also enhancing security and protecting against potential disruptions. By reducing latency through proximity to the data source and user, edge IT infrastructure will become a vital component of the global economy."
JLL's analysis concludes that enterprises typically deploy a mix of different data center types--on-premises, colocation, cloud, and edge--based on user needs. However, the continuous growth in data and connected devices has increased the demand for storage, computing, and network capabilities closer to the points of use, driving the need for edge computing and its associated data centers.
The size of the edge computing market can be assessed from various angles. JLL's estimate of a $317 billion total addressable market includes all IT infrastructure, colocation revenue, colocation supply, and cloud services revenue specifically at the edge. From an IT infrastructure perspective, the edge computing market comprises all the hardware--such as storage, computing, and networking equipment--necessary to deliver digital services at the network's outermost points.
