This significant capital inflow has been matched by an equally major technical shift, as enterprises have chosen to move workloads off-premises, first to colocation facilities and more recently to a mixture of colocation and public and private clouds. This shift has caused the largest cloud platform providers – Amazon, Google and Microsoft – to become the most influential players in many markets, altering data center sizing by a factor of 10. The 10-megawatt (MW) data center that was impressive 10 years ago now pales in comparison to 30-MW leases now signed with increasing regularity.
Dave Fanning, Executive Managing Director and Leader of Cushman & Wakefield’s Data Center Advisory Group, explains:
“The speed with which the industry is shifting makes the creation of a data center strategy a complex and daunting task. Enterprises must determine what to do with their on-premises facility, which workloads to move to the cloud and how implement a hybrid IT strategy. Developers and operators require a parcel with robust fiber and access to power as well as a thorough grasp of the permitting process and all risk factors. Investors must be able to assess the long-term potential of a data center to hold its value and how easily it can be upgraded. All involved require access to capital and a clear understanding of objectives.”
Cushman & Wakefield’s study evaluated 1,162 data centers across 38 global markets, with each data center scored across 12 weighted criteria. In consideration of each market, the highest weight was given to cloud availability, fiber connectivity and market size; mid-weight considerations were development pipeline, government incentives, market vacancy, political stability and sustainability; and low-weight considerations included environmental risk, land prices, power costs and taxes.
For the top 10 markets – Northern Virginia, Silicon Valley, Dallas, Chicago, New York/New Jersey, Singapore, Amsterdam, Los Angeles, Seattle and London – global leaders maintain supremacy. Still, emerging markets such as Atlanta, Denver, Dublin, Las Vegas, Phoenix, Portland, Salt Lake City, Sydney and Vancouver offer compelling alternatives.
Ranking #10 in the report was the London data center market. The largest market in Europe by total size, London remains a powerhouse with nearly 200 MW under construction through 2021 and a strong mix of global REITs and regional operators competing for the business of the large local financial sector.
“Brexit has not altered the course of the data center market, suggesting that greater global forces such as the increased prevalence of cloud services and the IT transformation of large enterprises are instead controlling local developments,” said Mark Trevor, partner and head of the EMEA data center advisory. “As further partnerships are formed to build hyperscale facilities across all of Europe, expect continued investment in London and possible consolidation among local operators,” he added.