Data Center REIT Digital Realty CEO: 'Supply Gap Is Widening' in $3T Supercycle

You can't build it fast enough. That's the verdict on the global data center shortage as the AI arms race intensifies. Andy Power, CEO of Digital Realty, the world's second-largest data center REIT, dismisses fears of a bubble, stating that real demand from customers with 15-year contracts ensures the sector isn't in an oversupply state.

The $3 Trillion Data Center Infrastructure Supercycle

A new outlook from JLL predicts an unprecedented expansion, with global capacity expected to nearly double from 103 gigawatts to 200 gigawatts by 2030. This growth is being fueled by AI workloads, which are forecasted to represent 50% of all data center capacity by the end of the decade. The investment required is staggering: up to $3 trillion over the next five years.

Hyperscalers like Nvidia, Amazon, Google, and Meta are leading the charge, allocating $1 trillion for data center spend between 2024 and 2026. However, supply constraints and grid connection delays of up to four years are creating what JLL calls a "perfect storm" that keeps vacancies at record lows.

Addressing the 'Bubble' and Credit Risk

Critics like Barry Sternlicht of Starwood Capital have raised alarms about the creditworthiness of tenants, specifically questioning if companies like Oracle are overextending for AI startups like ChatGPT. Power counter-argues that these hyperscalers have robust core businesses and that the physical infrastructure—the bricks and sticks—provides "tremendous insulation" against market shocks.