The Rise of Hyperscale Data Centres: Why Demand is Skyrocketing

The capacity of hyperscale data centres is expected to nearly triple over the next six years, according to Synergy Research Group. Currently, hyperscale data centres represent over 40% of the total global data centre capacity, with more than 1,000 such centres operational worldwide. Synergy’s latest data reveals that slightly over half of the hyperscale capacity is located in purpose-built data centres, while the remaining portion is housed in leased facilities.

Additionally, non-hyper-scale colocation capacity contributes to another 22% of the overall capacity, with on-premise data centres making up only 37% of the total capacity. This indicates a significant shift from six years ago when almost 60% of data centre capacity was housed in on-premises facilities.

As of the end of the previous year, the United States accounted for more than half of the global hyperscale data centre capacity, while Europe and China contributed 17% and 16% respectively.

Notably, major players such as Amazon, Microsoft, and Google dominate this space and are intensely competing to secure a significant portion of the global generative AI market.

In the coming years, Synergy predicts that hyper-scale operators will be responsible for more than 60% of all capacity by 2029, while on-premise capacity will decrease to just 20%. There is an expected rapid increase in data center demand globally, primarily driven by the nearly threefold growth of hyperscale capacity over the next six years.

Although the colocation share of total capacity is anticipated to gradually decline, Synergy also projects a continuous, steady increase in colocation capacity. Meanwhile, the on-premise share is projected to decrease by almost three percentage points annually, even though the actual capacity of on-prem data centers will remain relatively stable.

The significant expansion of Software as a Service (SaaS) and consumer-focused digital services, such as social networking, e-commerce, and online gaming, is a pivotal factor contributing to the soaring growth of hyperscale data centers.

Furthermore, the proliferation of generative AI technology and services is expected to further amplify these trends in the next few years, as hyperscale operators are better positioned to execute AI operations compared to most enterprises.

According to Kevin Restivo, head of European data center research at CBRE, hyperscalers have been actively pursuing larger, customised facilities to meet their specific needs for quite some time.