North America

1 Canada

Toronto

Data centre market context

Toronto is the leading Canadian data centre market. In comparison, it is almost double the size of Montreal. The Greater Toronto Area (GTA) hosts Canada’s largest commercial centre, with a reputation as being a business and tax friendly environment. It has excellent fibre connectivity, cool ambient temperatures, and is a low risk for natural disasters.

Toronto electricity tariffs prove good value when compared to adjacent USA cities.

The GTA is also home to the Toronto to Waterloo Technology Corridor, the second largest technology cluster in North America.

Construction market conditions and publicly known projects

The data centre construction market in Toronto is considered to be warm with slow, but steady growth as opposed to Montreal which we rate as a HOT market.

Customer fit-out projects are underway inside the DuPont Fabros/Digital Realty facility – opened in 2017 – that will eventually host 46MW of critical load.

The Urbacon Data Centre Solutions (UDCS) DC2 facility – in Richmond Hill, Barker Digital campus – featured ground up construction in 2018. This is a 16MW facility and the second of potentially five data centres on the campus.

2019 outlook

As a mature data centre market, the established USA retail colocation providers have a strong presence in Toronto and will continue to invest.

The wholesale colocation market, geared towards cloud service providers, has also emerged with relatively new players such as EdgeConneX.

However, Montreal has the lowest utility rates in Canada – which, combined with cheaper land, is more likely to attract continued hyperscale development.

COLO-D has recently announced that it will develop a new 150MW data centre in Saint-Bruno-de-Montarville, 15km from downtown Montreal. This move, it said, will make COLO-D Canada’s largest data centre provider for enterprise customers. Simultaneously, COLO-D will add 15MW to its D2 facility in Longueuil, for a total capacity of 220MW of renewable energy.

2 USA

Dallas

Data centre market context

The Dallas data centre market has seen tremendous and rapid growth over the past few years. It now seems to be the number two market behind Northern Virginia. Dallas is ideally situated in the middle of the country, with an impressive fibre network and cheap land available. Utility rates are competitive, and the state of Texas has its own independent power grid.

The data centre market is made up of downtown Dallas, the northern suburbs of Plano, Carrollton and Richardson, and reaches as far west as Fort Worth.

Dallas was traditionally an enterprise data centre market, though the colocation market followed. The enterprise data centres supported many of the Fortune 500 companies in the region as well as the healthcare, industrial and transportation segments. And it now also attracts the large hyperscale providers as enterprises continue to migrate to a managed cloud service.

Construction market conditions and publicly known projects

Large-build programmes were started back in 2016 and 2017 by companies such as CyrusOne, Digital Realty, Facebook, Google, QTS and RagingWire. These build outs started to come online in 2018 and as a result, the construction market conditions are considered hot.

The largest builds right now include Facebook with a US$1bn build programme, which will ultimately add 100MW of power to the region. And Google will be spending US$500m in Midlothian, Texas over the next two years. CyrusOne has a new 66-acre site which will soon be a new campus. In addition, Digital Realty has added 47 acres for a new campus in Allen, Texas, and T5 has also announced expansion of its new Plano site.

2019 outlook

The Dallas market shows no sign of slowing down in the near future and will continue to attract large hyperscale providers to the region. To quote Laramie Dorris, vice president of data centre design and construction at CyrusOne: “Giddy-up Texas!”.

 

 

New Jersey

Data centre market context

The New Jersey data centre market was always host to the neighbouring New York City business districts. The Sarbanes-Oxley Act came along and the New Jersey data centre industry exploded. Any active trading meant you had to be within a certain fibre distance from Wall Street and have a synchronised data centre facility.

The data centre colocation market also benefited for the same reason, though typically on a retail basis.

Sometimes a location has many expenses that other markets do not have. Unfortunately, New Jersey is one of the more expensive markets after California as far as real estate and utility costs are concerned.

Construction market conditions and publicly known projects

Data centre growth for New Jersey in 2018 is considered as steady, though in comparison to other locations we rank the data centre construction market conditions as lukewarm.

Continent 8 Technologies, the gambling data centre solutions provider, opened a new data centre at the Ocean Resort Casino in Atlantic City this year. The expansion is Continent 8’s second location in Atlantic City, responding to the demand generated by the passing of sports betting legislation, providing immediate availability to online gaming, sports betting and eSports vendors.

Last year, cloud infrastructure-as-a-service (IaaS) provider ProfitBricks opened a point-of-presence at Anexio’s New Jersey data centre, NJ1.

The company said the decision to establish the presence was taken due to rapidly increasing demand for cloud services in the East Coast region.

2019 outlook

While general enterprise turns to outsourced cloud service provision, when combined with the state's inability to attract hyperscale investment, we do not foresee the data centre construction landscape in New Jersey changing drastically.

 

 

North Virginia

Data centre market context

North Virginia, aka NOVA, is home to the world’s largest data centre market. The region has low latency connections to national fibre networks, and is a low hazard risk area with relatively low utility costs.

It is also business friendly, attracting a mixture of enterprise and cloud service providers serving the government, aerospace, financial services, technology, managed services and telecommunications industries.

The Dulles corridor is the most concentrated, and is commonly referred to as “data centre alley”. Though there is a growing data centre market in Culpeper, Henrico, Prince William, and now even Virginia Beach with its new subsea cable landings stations.

Construction market conditions and publicly known projects

2017 was a very busy year for data centre real estate transactions, with large tracts of land being bought for pending data centre campuses totalling 3.5m square feet of white space. Companies involved included Digital Realty, Coresite, CyrusOne and Equinix, to name but a few.

The major cloud service providers have accounted for over half of the growth in 2018, already topping 100MW.

2018 construction market conditions are considered hot with a further 1.8m square feet of white space known to be in construction.

Digital Realty moved to acquire 424 acres of undeveloped land in Loudoun County, Virginia for US$236.5m, or approximately US$558,000 per acre. The site is adjacent to Washington Dulles International Airport and located near bulk transmission lines as well as a major fibre path.

EdgeCore has acquired 36.8 acres of land to build a new data centre campus in Sterling, Northern Virginia. It will provide up to 144MW of critical capacity when fully built.

Cloud services provider Atlantic.Net has sealed a new data centre location for its services in the region. The added facility, a space rented from data centre services firm Evocative, will complement Atlantic.Net’s existing sites in Dallas, London, New York, Orlando, San Francisco and Toronto.

CoreSite has received final approval to expand the scope of its data centre campus in Reston, Virginia, adding an extra 50MW of capacity. With the approval of its application to modify zoning requirements, it can now build an incremental 289,000 of net rentable square feet.

New York-based services provider Sentinel Data Centers has invested US$82.5m in the acquisition of a 280-acre piece-of-land in Dulles, to build a new facility.

2019 outlook

With over 100MW of leases in 2018 already, growth is forecast to continue and accelerate in 2019, with the addition of another 3.4m square feet of white space.

This is larger growth than the rest of the country, with almost 300MW of construction set to be underway for 2019 and 2020.

 

 

Phoenix

Data centre market context

Phoenix has traditionally been a safe haven from California for disaster recovery as well as being a location for enterprise data centres. Phoenix has very low risk factors when it comes to natural disasters and is another location with inexpensive utility and land costs. It also has a concentration of major fibre providers spanning West to East.

The local political momentum is creating a business-friendly environment with tax incentives now being offered to attract Hyperscale business.

Phoenix currently ranks as the sixth largest data centre market in the USA, measured in megawatts of power deployed. Though it is widely expected to overtake New Jersey to land the number five slot in the coming years.

Construction market conditions and publicly known projects

The ability to attract cloud service provider investment, for self-build hyperscale or wholesale lease, has resulted in hot construction market conditions for 2018. Data centre power provision has nearly tripled in the space of two years. Presently, the market has seen over 700MW delivered.

2018 has seen major projects get underway for companies such as Edgecore and Iron Mountain. As for hyperscale projects, Microsoft has purchased around 260 acres of land in Phoenix for about US$48m, with mounting speculation that it will build another mammoth data centre to serve its cloud business.

The purchased land is in Goodyear, adjacent to Phoenix Goodyear Airport and the Arizona State Route 85 highway. Phoenix already supports Microsoft’s Azure Government region in the Southwest.

The Goodyear site also isn’t far from the 25,000 acres of desert land acquired by Microsoft founder Bill Gates in 2017 for US$80m, which he plans to use to build a smart city.

Infrastructure services firm Aligned Energy has announced a 200,000 square feet expansion at its 51-acre, 550,000 square feet data centre campus in Phoenix. The site, which was opened last year, currently has an energy capacity of 120MW.

The addition of Phase II will be able to accommodate an extra 60MW at full build-out.

2019 outlook

2019 looks just as positive from a growth perspective: CyrusOne, Digital Realty and QTS have recently purchased major tracts of land, with data centre construction planned in 2019 and 2020.

 

 

Silicon Valley

Data centre market context

Silicon Valley, synonymous with innovation and start-ups, is the home to many of the leading corporations that make the technology industry what it is today. Most other corporations that feature heavy engineering/industry are also represented in the wider Northern California area, taking advantage of, and investing in, world-class higher education and research and development.

However, it is well documented that California is one of the higher-risk locations for natural hazards, including seismic activity, fires and landslides. It also has high utility and land costs.

Though due to its corporate residents, and the fibre backbone that supports a low latency market, the data centre industry will always be strong in spite of the risks and the costs.

Construction market conditions and publicly known projects

The data centre construction market in Silicon Valley continues to be warm with only an outright global recession ever likely to make it cold.

Carter Validus Mission Critical REIT acquired two data centre properties in Sacramento, the Californian capital, for US$51m this year.

Digital Realty unveiled plans to expand its public cloud ecosystem by introducing dedicated and private access to the Oracle Cloud at its San Francisco and Silicon Valley data centres.

Last year, Equinix announced the building of a US$122m facility named SV10 at its Great Oaks campus in San Jose.

Also last year, Microsoft spent US$73.2m acquiring a 65-acre piece of land north of San Jose, with expectations that it would build a data centre there.

2019 outlook

Though highly unlikely to feature hyperscale deployment, we expect the Northern California data centre market to continue with steady growth, as a result of consistent year-on-year innovation and investment, and general enterprise cloud adoption.

It should be noted that the wider construction industry in Northern California is most definitely hot, if not over-heated, and considered a contractors' market.

 

 


This content is part of the Data centre cost index 2018

Go to the main Data centre cost index 2018 page