This article forms part of our ‘New How: Perspectives’ report: ‘Can real estate help solve the productivity puzzle?. To access this free report, please click on the download link to the right of this page.
The Covid pandemic has clearly had a significant impact on our society, the economy and everyday life, with numerous sectors having found life in lockdown incredibly challenging. However, one area that has remained relatively buoyant – and arguably an unsung hero in terms of helping to maintain our productivity levels – is the data centre market.
As a consumerist society, we have always been incredibly dependent on data centres, whether we were aware of it or not. From browsing the internet on a smart phone to backing up photos on the cloud to paying for items by contactless payment - we have all been large-scale consumers of services that rely on data centres. In fact, experts have predicted that the number of devices connected to IP networks will be more than three times the global population by 2023, so this reliance is only going to increase.
The digital economy is therefore big business for the UK, accounting for over 7% of UK GDP. Unsurprisingly, the shift by many to working from home this year has meant a sharp uptick in the use of video calls and additional devices consuming data, so much so that we have increased our reliance upon data centres significantly in 2020, with reports suggesting that operators are seeing up to 35% more traffic than before the first lockdown.
The lockdown periods have also meant that our social life has been significantly reduced, leading to people increasing their consumption of TV streaming services, video chat platforms and messenger apps. WhatsApp reported that usage increased by over 50% in April and Netflix saw 16 million new users sign up in the first quarter of 2020.
The move to working and socialising from home has meant that some companies have had to undertake an almost overnight scramble to increase their data centre capacity across the globe to ensure they could satisfy demand and maintain productivity levels. In fact, data centres have proved so crucial to everyday life and so central to our being able to continue working at broadly comparable levels to before the lockdowns, that data centre workers were added to the government’s list of key workers.
Pre-pandemic, the UK was already expecting to see an increase in data centre activity and international investment, owing to a combination of large-scale migration to the cloud by many businesses, increased use of data by consumers and the UK benefiting from readily available international fibre connectivity. Post-pandemic, the future looks brighter than ever before for an asset class that will arguably be a greater contributor to the UK’s productivity output than any other. You need only think for a moment what our lives – and the impact on the economy – might have been like had our digital infrastructure not been there to support the move to lockdown working back in March 2020, for a sense of the important role data centres have played.
As we look to the future and consider how our working practices will evolve further in the pursuit of improved productivity, one thing is for sure – our data centre heroes will be at the heart of it.
To read more of our perspectives on whether real estate can help solve the productivity puzzle, download our free report using the link to the right of this page.