CHICAGO, Jan. 13, 2025 – Artificial intelligence applications are rapidly expanding across industries, and the global data center industry plays a critical role in AI adoption and advancement. To meet the exponential data center demand, the sector will grow at a phenomenal pace in 2025. JLL’s 2025 Global Data Center Outlook explores how AI is not only driving demand but the development of more powerful and efficient data center infrastructure that balances computing power and sustainability.

Across the hyperscale and colocation segments, an estimated 10 GW is projected to break ground globally in 2025, while 7 GW will likely reach completion. Based on this current pace of under construction and planned developments, the global data center market will likely expand at a baseline 15% CAGR through 2027 – with the potential to reach 20%. Rapid expansion brings challenges, including demand outstripping supply and electricity development constraints in some markets. The industry also faces numerous opportunities such as the immergence of new technologies providing novel pathways for sustainability.

“The pace of AI innovation is not slowing down, and the data center industry must continue to adapt,” said Jonathan Kinsey, JLL EMEA Lead and Global Chair, Data Centre Solutions. “AI’s transformative power demands have already reshaped our world, yet its most significant and enduring effect may lie in how we rise to meet the substantial energy demands required to fuel this technological revolution. The results will fundamentally reshape data center design and operation.”

Forecasts suggest that global data center energy demand could double over the next five years. While data centers consume large quantities of power, they are one component of the complex global power challenge. Furthermore, data centers are expected to represent only about 2% of global electricity consumption in 2025. A variety of other factors like increasing EV adoption, machinery electrification and rising power consumption in developing countries also contribute to growing power demand.

Since data centers are often clustered together in metropolitan areas, significant bottlenecks in delivering power to new developments persist in some of the largest global data center markets like Northern Virginia, Tokyo and London. Additionally, these clusters are unevenly distributed across the globe, resulting in some countries and regions where data centers account for a considerable proportion of total electricity demand.

“Data center developers evaluate markets based on the availability of a few key aspects, including power, land, connectivity and tax incentives,” said Andy Cvengros, JLL Co-Lead U.S. Data Center Markets. “Scarcity is only half of the power story; transmission is the other part. The time it takes to erect transmission lines and substations to connect new data centers to the grid can be up to four years or more in some markets. Both established and emerging markets will see higher development levels in 2025, along with more developers exploring other energy solutions like natural gas and fuel cells.”

Being looked at as carbon neutral, large-scale nuclear power is emerging as a preferred alternative to traditional power, particularly for AI and high-performance computing applications. Companies worldwide are developing small modular reactors (SMRs), which, while still in the early stages, could offer a modular and scalable green energy power source at a fraction of the cost of large-scale nuclear. Though commercial deployment in the U.S. is unlikely until 2030 for a variety of reasons detailed in the report, JLL anticipates more SMR announcements this year.