Global edge data centre market poised to hit USD $317 billion

A surge in data-dependent technologies such as the Internet of Things (IoT) and generative artificial intelligence (AI) is expected to significantly increase the global demand for edge data centres. According to a report by global real estate consulting firm JLL, the edge IT infrastructure and data centre market is projected to reach USD $317 billion by 2026, up from USD $153 billion in 2020. This represents a growth of 107% over the six-year period.

JLL defines edge data centres as facilities that bring computing power closer to where data is generated or consumed. This move aims to enhance real-time data processing and decision-making capabilities by reducing latency and improving efficiency. The overall growth of edge computing will be influenced by technological megatrends, the need for faster data transfer, and high computational demands, along with policies and regulations.

Jonathan Kinsey, EMEA Lead and Global Chair of Data Centre Solutions at JLL, highlighted the importance of edge data centres in the technology landscape. "Consumers and corporations will continue to adapt to transformational technologies within daily life and 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 both seamless business operations in the future economy while also 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."

The JLL report reveals that the need for low latency and high bandwidth is a primary driver for edge data centre deployments, cited by 41% of data centre professionals surveyed in 2023. Security and data privacy were identified as nearly equally significant, with 38.3% of respondents highlighting the importance of these factors.

The rise in IoT devices is a critical factor fuelling this growth. JLL projects that IoT devices globally will expand at a compound annual growth rate (CAGR) of 9.8% over the next five years. In regions such as Asia Pacific (APAC) and the Middle East North Africa (MENA), rising internet and mobile penetration among rural populations are expected to contribute significantly to the market’s growth potential. Meanwhile, 21% of new data centre developments are occurring in edge geographies in the United States.

The report underscores the trend that enterprises often use a combination of data centre types, including on-premises, colocation, cloud, and edge, depending on their IT infrastructure needs. The consistent growth in data and connected devices is prompting increased demand for storage, computing, and network capabilities closer to end-use points, creating a more robust need for edge computing solutions and associated infrastructure.

JLL estimates the USD $317 billion total addressable market, including comprehensive IT infrastructure, colocation revenue, supply, and cloud services specifically at the edge. From the IT infrastructure perspective, this market encompasses all the necessary hardware, such as storage, computing, and networking equipment required to deliver digital services at the network's most remote points.