by Brianna Crandall — October 17, 2016 — A new report from global professional real estate services and investment management firm JLL on the national market for data center leasing shows Northern Virginia (NoVa) retaining its star power as cloud providers, enterprise and social media users continue to make it the largest global market for data centers in 2015 and 2016. The recent installation of new subsea fiber cables linking Virginia to Europe, Africa and South America make it an even more appealing hub for tech customers, and 2016 is already on pace to exceed last year’s historic demand by more than 30 percent, points out the report.
Allen Tucker, managing director of the Mid-Atlantic Data Center Solutions practice at JLL, commented:
Northern Virginia has become the dominant location for data centers given its strategic advantages over other national and international markets. It offers affordable and highly reliable power, is neutral to natural hazards, has robust fiber infrastructure that provides low latency to major metropolitan cities and is convenient to centers of government and monetary policy. All of these factor[s] make it very attractive for companies looking for wholesale data center and cloud capacity.
Demand for wholesale data centers and cloud technologies, and the data centers to support it, are increasing exponentially as the Internet economy fosters an accelerated rate of third-party data center providers and cloud adoption. The cloud-managed service sector is expected to double in the next five years. Providers are interested in bringing data storage and compute power closer to consumers to reduce latency time, increase reliability and improve consumers’ online experience.
Tucker continued:
It is no mistake that the most vibrant global market for data center[s], Northern Virginia, encompasses the world’s largest bank, the Federal Reserve, and the United States Government, which is the largest content generator in the world. Such quantities of information require high-volume cloud storage, while proximity increases the speed and dependability of access to that information. Additionally, the DC metro area has the highest per capita income in the United States, driving a robust consumer market that is increasingly connected to online shopping, video and movie streaming with demands for very fast, reliable internet service to process a high volume of daily transactions.
Northern Virginia data center market stats
The report provides an in-depth market analysis for data centers in 14 local U.S. markets and three in Canada, discussing supply and demand and assessing local outlook for users and providers. Covered markets are: Atlanta, Austin and San Antonio, Boston, Chicago, Dallas, Denver and Colorado Springs, Houston, Los Angeles, New Jersey, New York City, Northern Virginia, Pacific Northwest, Phoenix, San Francisco Bay Area, Greater Montréal, Greater Toronto, and Western Canada.
The report also explores other change drivers in the global data center market including rapidly evolving regulations of data sovereignty. These laws, requiring that data be housed within the same country from which it is accessed, are influencing data center location decisions, and acting as market-makers in certain countries. It is a smart move for these nations, which can achieve a double benefit of helping protect data, as well as essentially requiring new investment in their economies, notes the report. As a result, the industry’s biggest players are rapidly expanding internationally to meet growing demand and help users remain compliant.
How Northern Virginia compares to other major data center markets in the United States
Climate change is also becoming a clear influence on strategy, as the data center industry increasingly evaluates performance from socially responsible, environmental, and financial perspectives, according to the report. Providers are dynamically implementing cooling and powering strategies to decrease consumption, and are increasingly looking for access to renewable energy sources and water as major factors in choosing data center locations.
Wholesale data center providers who can keep up with these demands are well positioned to take advantage of tremendous growth opportunities in the data center market in coming years, says the report. More flexible build-outs allow diverse users to enter a market once dominated by only the largest players. Increasing efficiency using sophisticated analytics tools to improve usage planning is causing demand to spread out across primary and secondary markets and increasing returns on investment. With so much rapid evolution, everyone in the market is taking a fresh look at location decisions, rising to the challenge of a changing climate and leveraging new technologies to better capture the market opportunity.
Access the full 28-page North America report, Data Center Outlook: Strong Demand, Smart Growth, free of charge on the JLL Web site.
