by Shane Henson — September 20, 2013—The United States maintains its top ranking as the lowest-risk location for building and operating data centers globally, according to a report by hurleypalmerflatt, Source8, and Cushman & Wakefield, a provider of integrated solutions to landlords, tenants and investors at each stage of the real estate and commercial property process. The report, Data Centre Risk Index 2013 (DCRI) evaluates risks likely to affect the successful operation of data center facilities in the 30 most important global markets.
Since data centers house business-critical information technology (IT) systems, any downtime has the potential to threaten an organization’s viability and impact significantly upon revenues and customer services, reminds Cushman & Wakefield. The aim of the DCRI is to help companies make informed investment decisions about where to locate their data centers to increase efficiency, lower costs and to develop strategies to mitigate anticipated risk.
In the report, factors such as energy and labor costs, Internet connectivity, ease of doing business, and the likelihood of natural disasters or political instability are all taken into consideration and individually weighted to reflect different risk levels.
“In the U.S., factors such as robust Internet bandwidth capacity and connectivity and stable power costs contribute to its top ranking,” said Jeff West, director of Cushman & Wakefield’s Data Center Research in the Americas. “Throughout the Americas, secondary and maturing markets hold an abundance of potential. Despite ranking last on the Index [of the top 30], Brazil’s dynamic economy and strong demand ahead of the World Cup and Olympic Games is fueling a swell of new submarine fiber-optic cable and infrastructure construction, while Canada’s solid mix of strong market fundamentals and low risk is sure to continue to attract investment from the U.S. and Europe.”
The report also details how the United States continues to be, by far, the largest and best-served country in terms of information and communication technology infrastructure in general and connectivity in particular. The rapid adoption of technology and its impact on data center real estate shows no signs of slowing, and underlying market fundamentals will continue to trend positive. Tenant activity in major U.S. markets is showing renewed vigor in 2013, particularly in the San Francisco Bay Area and Northern Virginia. The U.S. construction pipeline continues to be robust with most established data center markets seeing variable levels of new supply as demand moves from the sidelines into decision making and outsourcing becomes more popular, according to the report.
Canada remains in fifth position globally and second in the Americas. Its top tier data center market, the Greater Toronto Area, makes up the majority of the Canadian market, although demand has been strong in all major Canadian metros for some time.
Brazil is the primary data center destination in South America as it encompasses the largest population and the best connectivity. As companies begin to move to take advantage of economic growth in South America, a steady stream of announced data center expansions and new facilities is expected to continue in capital cities as corporate and domestic IT absorption improves. Latin America’s communications markets offer one of the industry’s highest potentials for growth in the region and are projected to lead the global expansion in communication services over the next few years.
Thirty countries were selected for the Data Centre Risk Index, representing established data center locations, emerging markets, and a mix of key regional centers. The Index is based on a flexible risk assessment methodology that can be applied to any country in the world. Click image to enlarge.
Per the report, in other regions, the U.K. remains second globally in this year’s table. The nation’s high scores relating to international Internet bandwidth and ease of doing business helped maintain its place above all other locations surveyed in Europe.
Lastly, the Nordics, powered predominantly by hydroelectricity and with comparatively low energy unit costs, are becoming an increasingly attractive global data center location. Consequently, the Region 2 dominates this year’s global top 10: Sweden is ranked as the third safest place worldwide to base a data center, rising from eighth last year, while Iceland (seventh), Norway (eighth) and Finland (ninth) all feature in prominent positions. The only other European country in the DCRI’s global top 10 (besides the U.K. and the Nordics) is Germany, which is ranked fourth.
Hong Kong has maintained its position as the location with the least risk in Asia for setting up data centers—it moves up the index from seventh place into sixth.
