Northern Virginia moves into first place as a U.S. data center market
- October 29, 2015
Northern Virginia has surpassed the Tri-State New Jersey / New York region as the largest data center market in the U.S., according to a report from JLL.
The company’s annual Data Center Outlook says the region has nearly 20 percent of the market share in enterprise demand year-to-date in 2015.
Northern Virginia’s competitive utility rates, tax incentives, abundance of power and a robust fiber network compared to other Tier 1 markets -- such as New York/New Jersey, Northern California, Chicago and Dallas -- have made the region the most attractive global data center market for enterprise users of all sizes.
JLL cited stable utility costs that have hovered around six cents per kilowatt (kWh) for the last five years, compared to a national average of 7.4 per kWh of the markets JLL surveyed.
In addition, the report said data center operators in Northern Virginia are aggressively delivering turnkey data center space with new designs to meet enterprise user demand.
“We expect the 2015 data center market to be on par with or surpass 2014’s record levels and that Northern Virginia will also be the leading market again in 2016,” JLL Managing Director Allen Tucker said in a statement. “Users can expect to see continued stable pricing and concessions into 2016 as operators continue to compete for the nation’s most robust enterprise demand … “
The report provided this data on Northern Virginia’s 2015 data center supply:
· Total inventory: 7.3 million square feet
· Total commissioned vacant: 167,000 square feet
· Under construction: 223,000 square feet
· Planned: 606,000 square feet
Northern Virginia is home to the nation’s largest data center REIT operators (CoreSite, CyrusOne, DuPont Fabros Technology, Digital Realty Trust, Equinix, Quality Technology Services) with some having their largest global portfolio presence in Ashburn.
The JLL Data Center Outlook highlights other factors driving the market such as increased demand and M&A activity among owners . For instance, Digital Realty recently purchased Telx for $1.9 billion, nearly doubling its footprint and adding substantial services for the company.
Construction costs associated with a new data center are high, and the infrastructure investment can be as much as two to three times the amount to build, another reason why JLL says M&A has surged as small / medium size providers combine with larger providers to seek lower sources of capital.
The expense is greater for enterprise users, who have increasingly shifted away from owned and build-to-suit facilities to third party providers to offset cost.