Data Center Market 2022 Forecast: Private Equity Takes Over

‘Over the last 18 months there has been a very notable shift in buyers with private equity investors becoming a lot more active than data center operators,’ says Synergy Research Group Chief Analyst John Dinsdale.

Private equity and large investment firms continued to grab more share of the data center market in 2021 by spending tens of billions of dollars via acqusitions, with no plans of slowing down in 2022.

“The level of data center investment required is too much for even the biggest data center operators, causing an influx of new money from external investors,” said John Dinsdale, chief analyst at Synergy Research Group, in an email to CRN. “Over the last 18 months there has been a very notable shift in buyers with private equity investors becoming a lot more active than data center operators.”

In late 2021, private equity firms KKR and Global Infrastructure Partners announced their plan to acquire U.S.-based data center giant CyrusOne for a whopping $15 billion, making it one of the largest data center acquisitions in history. The investment firms plan to take CyrusOne private with the goal of expanding its international footprint, which already consists of over 50 data centers.

[Related: 10 Data Center Companies You Need To Watch In 2022]

Just a few months ago, global investment firm Blackstone Infrastructure Partners acquired QTS Realty Trust, a large U.S. data center provider, for approximately $10 billion. The $10 billion price tag was, once again, one of the largest data center acquisitions in history.

Cyxtera Technologies, a global data center provider with dozens of data centers across the globe, was acquired for $3.4 billion in July by Starboard Value Acquisition, a private equity special purpose acquisition company (SPAC).

“In quick succession, ownership of four of the top six U.S. data center operators has changed hands, while the two biggest names in the industry—Equinix and Digital Realty—are increasingly turning to joint ventures to help fund their growth,” said Dinsdale.

It’s not just on a national or global basis where investment firms are taking over the data center market, but on a regional level as well.

In December, investment firm Carlyle agreed to acquire regional data center provider Involta, which operates 12 data centers mostly in the central U.S. area.

One notable big investor in the data center market is global financial services giant JPMorgan, which recently unveiled it spent $2 billion on new data centers in 2021 alone. The New York City-based financial giant, which operates three data centers in the U.S., plans to invest billions more on new data centers through 2024 with the goal of accelerating its “modernization efforts” to increase operational efficiencies, according to the company.

Data Center Systems Forecast In 2022: $226 Billion

IT research firm Gartner predicts that worldwide IT spending will grow more than 5 percent in 2022 to $4.5 trillion.

Gartner projects global spending on data center systems will grow to $226 billion in 2022, up 11.4 percent year over year.

The demand for data center capacity is at an all-time high, spurred by digital transformation initiatives and demand for cloud services.

“Hyperscale operators continue to aggressively expand their operations, while both enterprise and consumer-oriented cloud markets keep on growing rapidly. This is driving an ever-increasing need for data center capacity,” said Dinsdale.

It will be interesting to see whicht massive data center providers will be acquired in 2022 by private equity and investment firms that are clearly betting the future on data centers.