Data centres in North America

Despite the disruption caused by COVID-19, the data centre market in North America has remained strong in 2021 following a record year in 2020. Growth is being dominated in Northern Virginia, Dallas, Phoenix, Chicago, Silicon Valley and Atlanta.

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

North Virginia, aka “NOVA” continues to be the world’s largest data centre hub, continuing to outpace other markets this year. 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. 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 due to its proximity to the hyperscale cloud providers, who account for the vast majority of market absorption.

The New York Tri-State area, which includes New Jersey, remains within the top ten data centre markets in the United States.

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 2021.

Construction market conditions and publicly known projects

In North Virginia, data centre construction market conditions have remained very hot during 2021. Several data centre companies have active projects or have recently purchased land parcels including Amazon Web Services, Digital Realty, Equinix, QTS and Yondr.

New developments are underway in Silicon Valley 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.

Phoenix has established itself as a major market focused on the Mesa Tech Corridor and Goodyear. Notable projects include Facebook’s plans to invest $800 million to build their first data centre in the state and NTT’s phase 1 of a 240 MW campus. EdgeConneX, QTS, Digital Realty, and CyrusOne have all outlined plans for future expansion within Arizona.

Chicago retains its spot as a top data centre destination. Microsoft broke ground on the first building at their 37-acre site in the Elk Grove Technology Park. Skybox Datacentres announced plans earlier this year to build a 30MW facility; their first project outside of Texas. Most recently, Prime Data Centres announced their planned expansion outside of California with a 150MW campus in the pipeline for this hot market.

2022 outlook

New entrants, larger land deals, and increased interest from private equity firms are the key themes in the North American data centre market. We expect these trends to continue into 2022 and beyond, including potential consolidation of the market enabling greater scale to meet constantly increasing customer demand.

Strong activity is set to continue over the next 12 months following notable land acquisition deals that have made headlines in 2021 including Google’s 300-acre purchase in Utah, Yondr’s 270-acre plot in northern Virginia, and Quantum Loophole's 2,100-acre land deal in Maryland, which aims to create a 1GW campus. The project pipeline for 2022 also includes NTT’s first phase 36MW build-out on its 102-acre campus in Phoenix, AWS’ $200M campus in Columbus and Facebook’s substantial expansion of current data centre campuses in Hillsboro and Atlanta.

Finally, as demand for data centre capacity continues to increase, so does the scrutiny on the environmental impact of these facilities. Sustainability has never sat higher on the agenda, with many data centre providers committing to net zero targets by 2030.

Facebook has gone one step further with an additional commitment to become water positive by 2030. Microsoft targets being carbon negative by 2030 and has further pledged to remove all the carbon the company has directly emitted by 2050. Expect to see significant investment and focus towards renewable energy and carbon-reduction technology in pursuit of these ambitious, yet critical targets.

For further information contact:

Joe Connolly
Vice President
e: [email protected]