That the strongest are getting stronger is one of the key points in the Global Data Center Market Comparison report just released by Cushman & Wakefield.
The past decade has seen $100 billion invested in data centers. Further, a decade ago, a 10 MW data center was noteworthy, while currently 30 MW leases are starting to become common. To drill into this level of growth, Cushman & Wakefield evaluated 1,162 data centers in 38 global markets.
Each market received an overall score based on 12 weighted criteria in three categories: Real estate and physical considerations (development pipeline, environmental risk, land price, vacancy), ecosystem advantages (cloud availability, fiber connectivity, market size, sustainability) and political and regulatory review (government incentives, political stability, power cost, taxes). The highest-weighted criteria were cloud availability, fiber connectivity and market size, all of them in the ecosystem category.
The big three cloud platforms (Amazon Web Services, Microsoft Azure and Google Cloud) not only comprise two-thirds of the market and have driven the expansion of hyperscale technology. They have also “led to the development of another nuanced ecosystem, with cloud on-ramps at colocation campuses providing fastest access to major cloud platforms.”
Both primary data center markets (like Northern Virginia, Silicon Valley, Hong Kong, Tokyo, Amsterdam and Frankfurt) and a handful of secondary markets (Zurich, Sao Paulo, Portland and Seattle) have access to all three of these major cloud platforms.
Fiber connectivity, market size
A faster, denser fiber network lowers latency, a crucial factor for applications such as the Internet of Things, 5G wireless networks and self-driving vehicles. The report’s top-rated markets for fiber connectivity are all in the U.S. and include Silicon Valley, Dallas, Northern Virginia, Atlanta and Los Angeles.
For a variety of largely historical reasons, the report notes, “Networks beget more networks.” The campus model of development plays into this, as operators have potential for multiple phases as demand grows. The top-ranked markets here are Northern Virginia, London, Tokyo, Beijing and Silicon Valley.
The rise of the best—but also of the rest
The final overall rankings of all 12 criteria put Northern Virginia in first place, followed by (in order) Silicon Valley, Dallas, Chicago, New York/New Jersey, Singapore, Amsterdam, Los Angeles, Seattle and London.
Cushman & Wakefield emphasized that although the top three sat well above the others in the top 10, the next 12 markets (4 through 15) were separated by less than 10 percent in their final scores. This, the report stated, “represents a new shift toward key secondary areas fast becoming primary markets around the globe.”
The most likely up-and-coming markets globally are (in alphabetical order) Atlanta, Denver, Dublin, Las Vegas, Phoenix, Portland, Salt Lake City, Sydney and Vancouver. The report closes by highlighting the fact that, rankings notwithstanding, every market has its own set of advantages and obstacles, and that any market could be the right one for a specific developer or operator.