The edge might still be a nebulous concept in the world of data centers, cloud, and telecommunications, but what’s not up for debate is that the edge market across all three of those sectors is set to explode due to the growing need to install processing capabilities closer to end users.

Real estate consulting firm JLL predicts that market will hit $317 billion in sales over the next 2 years. This includes the total addressable market of edge-specific IT infrastructure, colocation revenue, colocation supply, and cloud services revenue.

JLL’s predictions factors out to a 107% surge compared to where the market stood in 2020, with the expected growth being driven by IoT and generative artificial intelligence (gen AI). This requires “faster data transfer and high computation, as well as factors such as policies and regulations. From an infrastructural standpoint, organizations rely on edge data centers to process and analyze data in real-time at the edge of the network, facilitating faster decision-making and more efficient operations.”

The JLL report noted that this edge-focused surge is happening alongside greater IoT and genAI adoption. The firm predicts IoT device growth will increase at a near 10% compound annual growth rate (CAGR) over the next 5 years.

Andy Cvengros, managing director for U.S. data center markets at JLL, in an interview with SDxCentral initially clarified that JLL’s view of the edge market is the deployment of data center nodes in very specific locations to serve data and edge traffic demand. This demand has so far been satisfied with colocation facilities within those metropolitan footprints.

Much of this initial work has been done by cloud hyperscalers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) deploying their edge through those colocation facilities that sit within those specific locations or zones.

“That's just continuing to grow more and more as we're all consuming more technology,” Cvengros said. “And in requiring more technology to provide better performance you need to be closer to the user themselves. So that, extrapolated across the entire country, you're seeing every major metro really see organic growth there. You're seeing more edge stuff around being discussed – around cell phone towers and things like that – where we're using 5G and pushing a lot of load through our phones.”

Cvengros added that vendors have also been chasing this opportunity for years, citing players like EdgeConneX pushing out regional data centers that have leased edge locations to the larger hyperscalers. Cvengros also noted more “connectivity based” deployments done by vendors like Equinix and CoreSite, which was acquired by telecom tower giant American Tower.

“They are ultimately driving location,” Cvengros said. “They have lots of fiber going in and out of facilities, they have cloud on-ramps, and it’s more of an ecosystem-type play versus just pure capacity.”

A recent Forrester Research report found a similar push, noting IoT and edge opportunities were drawing heated competition from established content delivery network [CDN] providers looking to support new applications and large language models (LLMs).

“IoT and edge capabilities are getting a major overhaul as cloud providers rebrand themselves as distributed clouds,” the report notes. “On the other end, traditional CDNs are expanding their offerings to include intelligent edge environments. The intersection of genAI and edge via localized LLMs increases the draw, particularly for remote applications like oil rigs that require real-time analysis. … While the big cloud players have their own vast CDNs, the edge-to-cloud play flips the script and positions edge providers as equals to the hyperscalers in the hunt for lucrative enterprise edge business.”

Edge market opportunities

Despite the robust forecast, JLL’s Cvengros did note that initial growth has been somewhat geographically specific, explaining that the domestic edge market remains nascent.

“I personally have been reached out to by a number of groups who are looking to start up companies,” Cvengros said. “JLL manages a whole bunch of office buildings in downtown metro areas, and they want to put in edge nodes in the basement or the rooftops or whatever. But ultimately, just nothing ever really kind of comes of it.”

Instead, Cvengros said most deployments continue to be in colocation facilities like telecom hubs or “downtown metro-type footprints, and that has primarily been with hyperscalers taking that space for very specific reasons.”

Those hyperscalers are also most likely the ones that will continue to drive ongoing edge deployments.

A recent report from Technology Business Research (TBR) found that hyperscalers will be “eager to extract economic value from distributed computing use cases,” including an increased focus around AI opportunities, a notion Cvengros concurred with.

“It's all kind of consolidating to the big groups who are well capitalized [and can] do this stuff,” Cvengros said. “I think the users themselves are not necessarily ones to go procure the data center space so that's going to be offered through, call it an Oracle, or Microsoft, or AWS service offering. … You go to AWS to get cloud edge services in a specific market, cloud on-ramps and things like that. I think that's more likely than somebody doing it themselves.”