Labor transformation and new opportunities

In recent years, artificial intelligence (AI) has revolutionized our lives, profoundly affecting the workplace. Tools such as ChatGPT have been integrated into our day-to-day lives, allowing us to perform tasks more efficiently and reducing execution times. This technological advance has not only changed our routine, but has also reshaped the labor market by generating new jobs and boosting industries, such as -for example- the Data Centers (or Data Center)which has been boosted in recent years, along with the move of companies to the cloud.

Performance of the Data Center Market

In real estate, the data center market evidences robust performance, driven by cloud migration and AI, for example. In the U.S., despite a 33% decrease in transactions in 2023, total volume reached 4.8 trillion in this segment, an increase of 29% compared to 2022, which was maintained in the first quarter of this year, where inventory grew by 24.4%, according to CBRE. 

In Europe, meanwhile, the level of transactions grew by 76% in 2023 and inventory, as in the U.S., increased by 20% in the first quarter of 2024. In Latin America, it rose by 16%, despite a 55% drop in real estate market investment, as reported by CBRE.

And if we look at the study delivered by CBRE, 38% of the respondents presented an AUM of less than 5% of their portfolios in Datas Centers. But this result, when asked about their investment plans for the next five years, is reduced to 8%, in the expectation that investment will continue to increase.

Vacancy reduction and rate increase

Except for Asia-Pacific, all markets have experienced a reduction in vacancy during the first quarter of 2024. The Chicago market stands out with a record vacancy of 2.4%. 

In terms of pricing, CBRE notes that the shortage of stock has led to an increase in rates. In the United States, these grew by 20%, while, in Latin America, Santiago, Chile saw a 15% increase in the rate per kilowatt. Growing demand for cloud adoption and AI is creating new opportunities in the market.

Critical challenges: Energy and regulations

The sector faces significant challenges related to energy shortages, stricter regulations and lack of suitable land, especially in Europe. 

According to Goldman Sachs, ChatGPT requires approximately ten times more electricity than a Google search. Therefore, it is projected that the energy consumption of data centers will increase from 1%-2% to 3%-4% of the global total, with a significant impact on the energy sector. 

By 2030, data center energy consumption could equal the combined consumption of Portugal, Greece and the Netherlands, requiring an investment of more than $1 trillion in Europe.

For our country, CBRE highlights that the Humboldt submarine cable project, scheduled for 2026, represents an important opportunity to connect Chile with Sydney. This project could stimulate demand for data centers. However, the sector faces challenges, including the scarcity of areas suitable for construction and access to water, complicating development.

José Pedro Márquez
Senior Real Estate Portfolio Manager