Data Center Facilities Boom Sets New Record

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Chris Roach

DALLAS— Demand for the nation’s data-center facilities led to this commercial property sector setting a new record in 2019, according to BBG, a due diligence commercial real estate firm.

Data center absorption rates in U.S. major markets posted a new record of 396.4 MW (megawatts) in 2019, a 33 percent gain over 2018’s then-record level, according to an industry report. Data center space is measured in absorption rates rather than square footage.

Northern Virginia continues to remain the largest data market sector, representing 64 percent of last year’s total (254.6 MW).

Other top data center markets last year included: Silicon Valley (36.5 MW); Phoenix (32.5 MW); Dallas-Ft. Worth (25.8 MW); New York metropolitan area (16.7 MW); Houston (16.0 MW); Chicago (15.7 MW); Atlanta, (14.6 MW), and Austin/San Antonio (12.6 MW).

The data-center building boom has been largely fueled by the rapid growth of cloud computing. This has resulted in these facilities becoming one of the fastest-growing commercial real estate property sectors, which is estimated to reach more than $69 billion by 2024.

More companies are moving all or some of their IT operations to the cloud in order to manage the ever-increasing volumes of data. The data explosion is attributed to more people using the Internet for work, shopping and social interaction.

Data usage rates have spiked in recent weeks as a result of the nation’s response to COVID-19. The spreading virus led to the government shutting down businesses and schools, forcing millions of people to go online for work and other activities at home and other remote locations to avoid exposure to the virus.

The virus also has somewhat affected data center operations, ranging from a temporary construction halt on some facilities to reducing staffing levels and other safety measures for workers. However, the pandemic isn’t expected to have any long-term impact on the flourishing data center sector, as more companies adopt cloud-based services.

BBG CEO Chris Roach commented: “As the confluence of public, private and hybrid cloud computing strategies drives further expansion of the U.S. data center market, demand for these facilities will continue its upward trajectory as a result of the need to meet expected substantial growth in data usage in the years ahead.”