In 2024, we’re at a point in time where data is woven into the fabric of modern life, and it’s creating opportunities and jobs every day. Right now, for example, the data center industry is experiencing unprecedented growth.
Due to the explosion of digital content, cloud computing, IoT, and artificial intelligence moving towards artificial general intelligence, global data center traffic is expected to exceed 20 zettabytes by 2025. To put that in perspective, that’s more than 10x the volume of data transmitted in 2019 (and enough to store approximately 4 trillion HD movies).
It’s safe to say then, that this surge in demand requires an expansion in data center capacity. How much, exactly? The Digital Infrastructure industry is forecasted to double and possibly even triple in size over the next 10 years, with 38 GW (gigawatts) of new capacity required for general AI alone by 2028.
That said, data center owners and operators are off to the races to build new facilities or upgrade existing ones to keep pace with the digital age. This drastic increase in demand is causing many to scale, quickly, but not all have the internal bandwidth to do so. One way to seize the opportunity of this significant growth period is by tapping into the invaluable scalable expertise of an owner’s representative team.
Let’s break down where an owner’s rep can help take on your challenges and help you get to where you need to go quicker.
What are the drivers of data center capacity?
There are a few important factors that are driving the growth in data center capacity:
Artificial intelligence: The rise of AI and machine learning applications requires powerful computing resources. These applications need to process vast amounts of data and perform complex calculations, which is why high-performance data centers are being constructed.
Cloud adoption: As more and more businesses move their operations to the cloud, there is a greater need for data storage solutions that can scale and provide security.
IoT expansion: With the increasing number of connected devices, we are generating a massive amount of data that needs to be stored and processed in real-time. This data includes everything from smart home devices to industrial sensors, and it all needs a place to be stored and analyzed.
Edge computing: To improve user experience and reduce latency, data centers are being built closer to where the data is being generated and used. This demand for localized facilities is driven by the need to process data quickly and efficiently.
5G deployment: The rollout of 5G networks enables faster data transfer speeds and supports a higher number of connected devices, leading to increased data traffic and storage needs. 5G facilitates emerging technologies and applications, such as augmented reality (AR), virtual reality (VR), and smart cities, which require substantial data center resources. One example of the impact of 5G is its ability to reduce movie download times, decreasing (a standard 3 GB movie) from approximately 30 minutes to just 1-2 minutes.
New services: So much demand for things like online streaming services and e-commerce, have forced the need for more robust data infrastructures.
These factors are all contributing to the increase in data center capacity, as businesses and industries recognize the importance of having reliable and efficient data storage and processing capabilities, while also requiring enterprise owners and their development partners to possess the skills needed to navigate substantial challenges.
6 challenges of the data center industry
- Power availability
Put simply, with no reliable, scalable power supply, there is no digital economy. Data centers are energy-intensive, and obtaining the necessary power infrastructure can be challenging. Some markets lack power generation capacity, while others lack power transmission and distribution capacity. These roadblocks force the question: How can we get the power to where customers need it?
- Community engagement
While the data center industry is clandestine for a reason - to keep data safe - the secretive nature causes a lack of understanding amongst communities, leading to mistrust and pushback on new projects that come along with noise, traffic and environment impact. This is where an owner’s rep plays a critical part in handling communication, mediating between parties, and continuing the effort to keep data centers low-key while continuing expansion and commitment to being a good neighbor to communities.
- Trade labor availability
According to the iMasons State of the Industry Report, there will be an estimated 300,000 unfilled jobs throughout the Digital Infrastructure industry in 2025. Not to mention, 40% of the current workforce is expected to retire within the next 15 years. The demand for skilled labor in the construction and operation of data centers often exceeds supply, and this struggle to attract, train and retain people can lead to project delays and increased costs.
- Equipment costs
Inflation is affecting every industry, including data centers and supply chain. The price of high-tech equipment and materials is rising. supply chain fluctuations can lead to cost overruns and delays. UpTime Institute estimated, for example, that costs for Tier III specifications had increased by $1-2 million per MW by 2022.
- Sustainability
Data centers consume significant amounts of energy and water. Concrete, steel and aluminum are responsible for 23% of global carbon emissions, while concrete alone makes up 11% of total global emissions. Implementing sustainable practices is crucial to reduce environmental impact and meet regulatory requirements. This, along with labor shortages, is a top concern among data center operators according to Uptime Institute’s annual survey results.
- Costly outages
While outages have steadily decreased in the past few years, the consequence of one happening can come with a serious sting. For example, over 50% of Uptime survey respondents said that severe outages cost them upwards of $100,000, and 16% said their most recent outage cost $1 million or more. The silver lining is that the root of this issue is consistent: disruptions to on-site power. Knowing this, many organizations have taken steps to minimize risks by focusing on rigorous commissioning and acceptance testing supported well developed operations management processes.
The role of an owner’s representative is the key to unlocking success instead of stress
When building massive new projects, it’s critical to get the right people to manage budgets, timelines and ensure each milestone is met with healthy communication. And while a traditional project manager or construction manager handle key aspects of the project, an owner’s rep, especially one with a background as an enterprise data center owner/operator, offer broader skills and understanding to address a wide range of stakeholder interests. Their experience as former owners allows them to take into account long-term business goals rather than just construction goals. Let’s break it down.
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3 key reasons you need an owner’s rep over other project managers
- Offers a more holistic perspective
While a traditional project manager and construction manager zoom in on one or two critical aspects of a project, an owner’s representative offers a deeper well of expertise. While they consider both timeline and budget, they also consider the facility's entire lifecycle. Examples include overseeing design development aligned with business requirements, competitive procurement, senior leadership communication/approvals, entitlement negotiation, utility service capacity requirements, supply chain management, including CapEx and OpEx material changes, communication pathway for operations issues, and customer onboarding, to name a few.
- Provides start-to-end expertise
From planning and design to construction and operations, an owner’s rep has experience with everything the client needs from the moment a project starts to 24x7x365 uptime. Because of this, the client can have peace of mind knowing they can focus on their business, not their build. The result? Less stress and more successful projects.
- Serves as a one-stop-shop point person
Owner’s reps serve as one centralized person in charge of keeping a watchful eye on everything. This means a simpler, smoother communication line between numerous project development parties. With their thorough understanding of each moving part of a project, an owner’s rep is able to liaise with the complex web of architects, engineers, contractors, government agencies, and suppliers to connect dots, clarify information, and catch mistakes.
The J2H difference for data center owners and operators
J2H Partners offers unique value to data center owners and operators through its owner’s representative services. With extensive knowledge as a COO of a data center provider, our team leaders at J2H have a deep understanding of data center operations and what is needed to manage expectations with the other stakeholders in the organization including CEO, finance, investors, IT, etc.
This expertise, coupled with a customer-focused lens, allows them to:
• Anticipate operational challenges and plan accordingly.
• Optimize both CapEx and OpEx to ensure long-term profitability.
• Manage the facility’s brand and reputation within the community.
• Provide strategic insights that go beyond construction, focusing on overall business success.
The J2H difference for data center investors
For data center investors, J2H Partners offers critical advantages. Leveraging their COO and engineering experience, J2H helps private equity firms underwrite the technical and financial aspects of their investments.
They offer a comprehensive perspective that includes:
• Detailed technical evaluations to ensure the data center meets operational needs.
• Financial assessments that consider both immediate and long-term returns.
• Marketing and sales strategies to enhance the facility’s market position.
• Operational insights that optimize the value of the investment.
Ensure project success from start to finish
In the rapidly evolving data center industry, having an experienced owner’s representative can make all the difference. J2H Partners, with our leadership’s extensive experience owning and operating data centers, and creating critical networks, offers unparalleled expertise in both operations and investment. We provide strategic insights that ensure your data center projects are successful from construction through to long-term operations.
To learn more about how we can help you achieve your goals, contact us directly for more information. Let us help you navigate the complexities of the data center industry and secure your position at the forefront of digital infrastructure.
