By Arnav Kacker, Senior Principal
Executive summary
The data center buildout has become one of the most capital-intensive growth stories in technology, and the most durable returns may sit not in the campuses themselves but in the services and equipment that keep them running. US data center power demand is growing at roughly 22% CAGR from 2023 to 2030, climbing from about 4% of total US electricity consumption to 12% over that period. By 2030, an estimated 70% of total data center demand will come from AI-equipped facilities. For investors and operators, the takeaway is straightforward: demand is outpacing capacity, vacancy is tightening, and the supporting value chain offers fragmented, high-growth entry points that the hyperscalers cannot fully internalize.
Demand is outrunning supply
Capacity additions are not keeping pace with the appetite for compute. Colocation vacancy rates in North America have compressed to roughly 4.5%, and available space is increasingly hard to secure, with many facilities offering limited capacity under 5MW. That scarcity is what makes the buildout self-reinforcing: enterprises and AI developers are competing for racks faster than new gigawatts come online. The demand picture rests on several reinforcing drivers. Cloud service providers now own more than half of the world’s AI-ready capacity, and over 80% of organizations operate across multiple private or public clouds with continued migration expected. Roughly 76% of institutions already use data centers, a figure expected to rise as AI moves into core workflows. Add data localization rules and heightened security requirements, and the demand base broadens well beyond the hyperscalers driving headline builds.
Power and the supporting value chain
Power is the binding constraint, and that is precisely where the investment case sharpens. As grids strain, the equipment and services that guarantee 24/7 availability become essential rather than optional. Backup generators are in high demand for reliability and can sustain operations for days during outages. Uninterruptible power supply systems require critical upgrades for high-density racks, energy storage systems reduce grid dependency, and modern cooling and thermal management is increasingly necessary as racks climb to higher wattages. Beyond power, the chain spans construction and engineering firms with data center-specific expertise, operations and maintenance providers managing SLAs and predictive upkeep, and adjacencies such as interconnection and DCIM software. Segments like core infrastructure and IT hardware are concentrated among a few leaders, while construction, O&M, and ancillary services remain fragmented, leaving room for platform creation and roll-up.
Capital is flowing across the chain
Investment is led by hyperscale owner-operators, private equity, and colocation REITs, but the sponsor opportunity increasingly lies in the service layer. Recent activity makes the pattern clear. Partners Group invested $1.9B into wholesale developer EdgeCore in 2024, and Blackstone pledged $8B through QTS in 2023 to fund new builds amid a competitive land grab. On the services side, KKR acquired liquid cooling specialist CoolIT Systems, Warburg Pincus backed data center maintenance provider Service Express, and Pearce Services combined with Unified Power to build an independent platform for UPS and generator continuity. PE investors are deliberately hunting high-growth support providers, with some aiming to assemble integrated platforms across the value chain to deepen market entrenchment.
Implications for investors and operators
The most attractive entries may be one step removed from the campus. Hyperscalers will continue to control land and power for their own workloads, but the fragmented services around them, power continuity, cooling, O&M, and connectivity software, offer the platform and roll-up dynamics sponsors favor. The diligence questions that matter are durable: how defensible is the target’s positioning as the chain consolidates, how exposed is demand to AI capex cycles, and how sticky is the customer base. Operators should weigh whether to specialize in a high-value niche or build integrated breadth. In a market defined by scarce capacity and relentless power demand, the providers that guarantee uptime hold real pricing leverage.
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