How will the metaverse impact data centers?

James Cook: [00:00:00] Web three. The metaverse. The future of the internet is a little unclear. And that's probably because it's still being built. We do know that the metaverse doesn't refer to one specific thing. It's more of a shift in how we interact with technology. And it could very well revolutionize how you live, work and play.

James Cook: [00:00:24] Today we hear about the possibilities of the metaverse and then the data centers that power, the metaverse. How are they going to keep up for that? We're going to turn to Brian Kortendick and David Barnett. We're going to hear insights from JLL data center outlook report. But first I'm talking with Harrison, Montgomery with Ariel.

James Cook: [00:00:57] This is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook. I research real estate for JLL.

Harrison Montgomery: [00:01:10] I'm Harrison Montgomery. I am the vice president of marketing here at Ariel. All of our propriety technology was focused on creating the metaverse. And what that allows consumers to do is interact with the real world around them. we have the ability to sell digital real estate, based off of geospatial location. So when it comes to all these decentral lands and the. Virtual reality Mehta versus is have the actual patent on being able to sell locations in the digital rights to them the traditional. Renderings that you'll see they give you a sense, but now with this new technology, it's almost like you're seeing a video of the future.

Harrison Montgomery: [00:01:49] Yeah. So we have two ways of placing content. One is. Based off of geospatial coordinates. So say you were in Texas and you were going up to a new community and you knew exactly where your lot was going to be pull up your phone or your iPad. There's your new home that you've created in that real existing environment.

Harrison Montgomery: [00:02:05] So could walk into it, you can walk around it, you can see the views outside your window. You can see how real-time, lighting's going to hit it. and then obviously we ability to just tap in place. So let's say you were in California and you were moving to Texas. Well, we have the ability to create a full community build out and you can place it right there in California so that you can do all your builds there, but not only that is, you can also explore the community.

Harrison Montgomery: [00:02:26] the other thing that you mentioned is this idea of digital rights So it's similar to how you buy and sell land. Now, What the only difference is it's the digital space above it. it allows people to put digital twins on their homes or on property. the great thing about having that digital twin or having that digital real estate is we can now.

Harrison Montgomery: [00:02:47] Measure all the same things you could measure on a website, say instance, Google analytics. Now we can measure it with the real world. So we know exactly how people interacting with their real world.

James Cook: [00:02:55] you're selling, digital rights to sort of the augmentation of reality, but because it's virtual, aren't there infinite numbers of augmented realities?

Harrison Montgomery: Our technology is all based off of your current Cartesian coordinates. In order to essentially build another augmented reality. Digital map of the world, you would either have to have infinite pictures that are always updating, or you would have to create a new coordinate system that allows you to place content in that exact location. So, you are right in a sense that there multiple. Quote-unquote Metta versus, JLL could have their own metaverse but we're bringing it all into a digital map of the real world.

James Cook: [00:03:35] So it is a, in essence, a digital twin of the real world. But what can we be able do with this in the future?

Harrison Montgomery: [00:03:46] it's going to force people to think in multiple dimensions. So you look at web two now they, think it's a flat website. with web three, it's more of a. Multi-dimensional world and it allow people to dive into how experiences are tied to locations, how experiences are tied to 3d assets and really how tied to the real world experiences.

James Cook: [00:04:05] what's allowing this to happen?

Harrison Montgomery: [00:04:07] with Amazon web services, all of these cloud computing web services is they've really started to drive virtual machines. And what that allows us to do we can spin up these high-powered virtual machines that are rendering these graphics. And just stream it to the web or to the app

Harrison Montgomery: [00:04:23] It's simply just a load time for loading a website or loading an app, and then everything is cached on your device. So you don't have to worry about losing it or losing connectivity.

James Cook: [00:04:32] Harrison. I really appreciate you joining me today.

Harrison Montgomery: Yeah, thanks for having me

James Cook: [00:04:36] So now that we've heard about the capabilities of the metaverse, let's find out what that means for the data center industry.

Brian Kortendick: [00:04:45] My name's Brian Corton, Dick. I am the executive director over global data center, strategy and growth within JLL.

David Barnett: [00:04:53] I'm David Barnett. I lead our data centers research.

James Cook: There's going to be this advent of people living, working, and playing more and more in what we're calling the metaverse sort of like virtual reality internet. So that means we need more data centers in the future, right?

David Barnett: [00:05:10] I mean, that's usually what's been the case, especially over the last year is you've seen this trend. With digitization and technology advancing, you saw hybrid work, really accelerate the demand for data center space. If you saw employees work from home and the capacity they need. In 2019. And that was a record year for absorption, which we measure as demand for megawatts and the power it needed. 2020 was also a record year and we have a record year in 2021. Again, it keeps feeding off itself. So really strong growth across the board for the data centers.

James Cook: [00:05:37] Is demand equal everywhere, or is it different in different places?

David Barnett: [00:05:41] Really we've seen this consistent, especially in a mayor and Asia Pacific and the flat markets, which is, you know, Frankfurt, London, Amsterdam Paris, and even Midrin Stockholm, which we started to track a little bit more closely scene that really picked up from technology companies, cloud companies that also that social media presence as well, Yeah.

James Cook: [00:06:00] And I can imagine the pandemic probably influenced that as well.

David Barnett: [00:06:02] Yeah, definitely. Like I said, people are working from home plan from home. You need the internet to power, all of that, that you saw just huge uptick in streaming services, beyond Netflix and chill, but also for work, programs like your teams, your Cisco, WebEx, whatever it may be, you really saw an increasing applications for users, to make sure that they can remain productive, have that same level at least of collaboration with their colleagues as they work from home.

James Cook: [00:06:24] are there any constraints around building data centers?

Brian Kortendick: [00:06:29] Yeah. I think what you're really starting to see too, is issues in terms of deployment of data centers, in terms of construction resources available to complete just in some recent discussions, I've had one of the major data center. Contractors is turning away, work at this. there are a year out, in terms of being able to source any more projects.

Brian Kortendick: [00:06:48] So I think you're going to continue to see that impact through the tremendous growth that we're saying, combine that with what we're seeing in terms of the labor shortage. And it's also those experienced individuals that you need on those types of projects are saying a big shortage in that even from the project management side of things as well.

James Cook: [00:07:07] So, how do you combat that?

Brian Kortendick: I think the industry is really struggling from that perspective, there's organizations like infrastructure masons, and trying to educate the markets around data centers in terms of career choices. Also around the trades in terms of bringing more people into the trades that traditionally we would automatically push towards college where the salaries of what you're saying, some of these people at are tremendous.

Brian Kortendick: [00:07:33] and so that cost is going way up. just to get that as experienced resources. The other thing comes down to training of new people, bringing them into the market. And then how do you go about doing that? And that also ties directly to the operations staff themselves. It's one thing to build. Then on the backside, you've got to operate. so many people competing for resources is extremely difficult and you're starting to see, it impacting enterprise data centers as those resources are pulled out of enterprise data centers due to higher wages. Within hyperscale or co-location markets, it gets even more difficult.

James Cook: [00:08:08] When you say enterprise versus hyperscale, what does that mean?

Brian Kortendick: [00:08:13] If you're looking at an enterprise data center that would be your traditional corporation, your financial institution who still retain a data center operation. you'll see that, They're starting to have those resources picked from them and moved into the co-location markets. And I think you're going to see very short longevity between company to company, as people just kind of trade off. More money with, another company, because I think it will eventually get to almost be a bidding war for qualified personnel.

James Cook: [00:08:41] I haven't really spent that much time in data centers, but I imagine you have to have some people are. Physically there and then, technical people to deal with all the issues to right.

Brian Kortendick: [00:08:51] the critical operation side of that sets with the mechanical and electrical equipment, If you think of the size of these facilities in terms of all overall power draw and the criticality of these facilities, they can't go down. So you have to have that 24 hour staffing

James Cook: Why does a data center always have to be up? it's the backbone, really the internet, it's all our deals. We're making online transactions, online streaming services, online gaming, all flowing through these data centers.

David Barnett: [00:09:20] So if that goes down, you're going to have some issues that have really large ripple effects.

Brian Kortendick: [00:09:24] if you're looking at a banking application, let's say For an ATM, if they go down. Or you have a stock trading firm where they lose power. You're losing transactions and you're losing millions and millions and millions of dollars. And if you look at healthcare, it's also actually getting into. Potential lives. So that's the criticality that you're dealing with these systems, and even the most basic thing, if you can't get on Metta or a I Amazon, or any of these, you're going to scream bloody murder.

Brian Kortendick: [00:09:54] If you can't get to the application. And that's called loss transmit. You go on a website to procure [00:10:00] something. Well, it's not up. I'm going to go to somebody else. everything is based around the technology that resides with the data centers. any type of a process that is dependent on that data, it has, as David said, major ramifications of ripple effect across that ecosystem.

James Cook: [00:10:17] do we expect that, as this computing, becomes more powerful and more prevalent that that's going to increase demand for data centers?

Brian Kortendick: [00:10:26] Very much. So I think, you did ask me a little bit earlier about a hyperscale data center versus enterprise. hyperscale are those. Data centers that we classified like a Google or an Amazon or a Facebook, these large organizations that drive the internet and drive a lot of the social media business right now are driving the co-location market. Just to try to keep up with demand of applications that are moving to the cloud. I haven't seen the latest stat in terms of what percentage of applications reside in the cloud versus what still remains within that enterprise status centers. But I would think that that has shifted pretty dramatically, especially, over the last two years, everything starting to move towards a cloud. Eventually it will all move to the cloud,

James Cook: [00:11:14] So what are our predictions for the future?

Brian Kortendick: [00:11:17] we're going to continue to build at a tremendous rate. I don't see that slowing down dramatically anytime soon, because I don't think our lust for data is going to go away. So there's got to be new technology or new solutions brought into play that are going to be more sustainable you see it happening in the EU where they're coming up with green standards, around data centers you're going to see that type of regulation eventually. Come to the United States. It's something that we got to prepare for. It's something again, evaluating new technologies, new energy sources that are going to be able to make this industry grow without having a devastating impact upon the carbon emissions and net zero carbon.

James Cook: This has been a fascinating conversation. David, the new research report, remind us of the title and where folks can get a copy of it?

David Barnett: [00:12:13] It's our data center year end 2021 outlook report. So that covers our U S markets or may Mayo markets, and also India's Brian, David, I really appreciate your time and, thank you very much.

Brian Kortendick: [00:12:24] Thank you.

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