Edge data centre market to exceed $300 billion by 2026

The global edge data centre market is expected to surpass USD$300 billion by 2026, driven by the increasing reliance on data-dependent technologies, including the Internet of Things (IoT) and generative artificial intelligence (AI), according to a report by JLL.

Analysis by the real estate consulting firm projects the market will grow from USD $153 billion in 2020 to USD $317 billion by 2026, representing a 107% increase.

JLL describes an edge data centre as a facility that brings computing power closer to where data is generated or consumed. As technology evolves, factors such as faster data transfer and high computation rates, coupled with policies and regulations, will significantly influence the growth of edge computing. These data centres enable real-time data processing and analysis, facilitating quicker decision-making and more efficient operations.

The rise in edge IT infrastructure is expected to correspond with the growth of IoT devices, which JLL's analysis suggests will expand at a compound annual growth rate (CAGR) of 9.8% over the next five years. According to a 2023 survey of data centre professionals cited in JLL's analysis, the need for low latency and high bandwidth was identified as the primary driver for edge data centre deployments by 41% of respondents, followed by data security and privacy concerns at 38.3%.

The demand for improved products and services, including low latency, high computing power, generative AI, and omnipresence, will continue to drive the adoption of edge data centres. The Asia Pacific (APAC) and the Middle East North Africa (MENA) regions are particularly noted for their potential growth due to increasing internet and mobile penetration among rural populations. In the United States, 21% of data centre development is occurring in edge geographies.

Jonathan Kinsey, EMEA Lead and Global Chair of Data Centre Solutions at JLL, highlighted the importance of edge data centres. “Consumers and corporations will continue to adapt to transformational technologies within daily life. Without the distribution of data processing and storage across various locations, cutting-edge efficiencies and solutions like IoT and generative AI will not transition to mainstream acceptance,” he said. “Edge data centres will be essential to ensure seamless business operations in the future economy while improving security measures and protecting against potential disruptions. By lowering latency by bringing the computing infrastructure closer to the data source and user, edge IT infrastructure will become an essential component in the international economy.”

JLL’s analysis suggests that enterprises typically utilise a combination of different data centre types, including on-premises, colocation, cloud, and edge, to deploy their IT infrastructure based on user needs. However, the continual growth in data and connected devices has created a need for increased storage, computing, and network capabilities closer to end-use points, underpinning the necessity of edge computing and associated data centres.

The estimated size of the edge computing market, as projected by JLL, comprises IT infrastructure, colocation revenue, colocation supply, and cloud services revenue at the edge. From an IT infrastructure perspective, the market includes all hardware necessary to deliver digital services at the furthest points of a network, such as storage, computing, and networking equipment.