Data centres in North America

Despite the disruption caused by COVID-19, the data centre market in North America has remained busy with around 395MW under construction in 2020.

With the public spending more time at home, there’s been a 30 percent surge in internet use, further fuelling data centre demand.

However, despite soaring demand, there have been acute staffing shortages due to COVID-19, which have impacted data centre construction capacity in North America.

North Virginia, aka “NOVA” continues to be the world’s largest data centre hub, continuing to outpace other markets this year, with over 270MW under construction. This part of the US is favourable to data centre clients thanks to its low latency connections to national fibre networks, low utility costs, and great tax incentives.

Dallas has maintained its position as the second-largest data centre market in the US. Despite downward pressure on rental values, caused by increased competition and oversupply in the past two years, the low cost of land, affordable power, robust fibre infrastructure and economic incentives continue to attract data centre developers and operators to the region.

Silicon Valley is the third-largest data centre market in the US. Despite expensive land, comparatively high cost of power and risk of natural disasters, this market continues to attract investment thanks to its proximity to the hyperscale cloud providers, who account for the vast majority of market absorption.

Phoenix is an emerging data centre market to watch. With power costs being competitive when compared to the California market, Arizona offering tax incentives and greater availability of skilled labour, this makes Phoenix a very attractive market for data centre providers. Phoenix currently has 40 providers with 76 facilities.

The New York Tri-State area, which includes New Jersey, remains within the top ten data centre markets in the United States. New construction underway may exceed 20MW, which would be nearly a 15 percent increase in total current inventory.

The Greater Toronto Area (GTA) is home to the Toronto to Waterloo Technology Corridor, the second largest technology cluster in North America. However, while Toronto continues to be an important Canadian market for data centres, with many hyperscale developments underway, Montreal has seen more activity in 2020 with over 50MW under construction compared to Toronto’s 10MW.

Construction market conditions and publicly known projects

In North Virginia, data centre construction market conditions have remained very hot during 2020. The cost of land in the Dulles corridor continues to escalate, with some parcels surpassing $1M/acre.

Several data centre companies filed for permits in 2020 including Aligned, Digital Realty, Equinix, QTS Data Centres, as well as several hyperscalers. Amazon, most notably, submitted plans for a 1.75 million sq. ft. development in Chantilly.

The Dallas construction market has remained warm in 2020 with Equinix, QTS, Digital Realty and Compass Datacenters delivering additional capacity.

Amongst the hyperscalers, Facebook filed building permits to add a further 277,000 sq. ft. to its existing 2.5M sq. ft. campus in Fort Worth. Meanwhile, Google continues to expand its footprint at its 375-acre campus in Midlothian.

In Silicon Valley, new developments are underway from STACK Infrastructure, Digital Realty, NTT Global Data Centres and various other providers, which will add a significant amount of new capacity and competition to this hot market.

Over 32MW is under construction in Phoenix in 2020. Companies like EdgeConneX, QTS, Digital Realty, CyrusOne, and NTT have plans to build large campuses in Mesa.

In New Jersey, data centre growth continues to be warm across the market. There has been a recent uptick in build to suit facilities with projects such as Digital Realty’s new 600,000 sq. ft. data centre campus in Totawa.

2021 outlook

With more than 250MW estimated to come online in North Virginia in 2021, market growth is forecast to continue at a rate faster than the rest of the country, although key markets such as Dallas, Phoenix, Chicago, Silicon Valley and New Jersey are also primed for significant levels of growth.

In Dallas, there remains a significant amount of vacant inventory to be absorbed before the market is to return to pre-2019 levels. In Silicon Valley, by contrast, vacancy rates have remained in the single digits, leading to strong leasing activity and sturdy competition between providers. Here, market conditions will remain hot with new inventory from multiple new projects coming online throughout 2021.

In Phoenix, there is a range of major projects coming downstream in 2021. Stack Infrastructure is planning a 1M sq. ft. facility, CyrusOne has a 2.6M sq. ft. facility in planning along with 1.5M sq. ft. facility by RagingWire Data Centres. There are several other US$1bn+ mega facilities in the works and large expansions up to US$500m.

It’s anticipated that the Toronto market will continue to grow at a steady pace, however, dramatic growth is not anticipated in 2021. Montreal is expected to outpace Toronto in 2021 with hyperscale and other developments, due to cheap utilities and competitive prices for suitable land.

For further information contact:

Whitney Villalobos
Vice President
e: [email protected]
t: +1 303 589 9762