Northern Virginia, Phoenix lead global markets with most future data center inventory

Dive Brief:

The data center industry saw continued demand and growth in the first six months of 2018, setting the stage for an equally robust end of the year, according to a report from professional services and investment management company JLL.
Continuing a trend of previous years, the U.S. has high absorption and demand for data centers, with more than 575 megawatts of data center space under construction across North America in the first half of 2018. Northern Virginia (317 MW) and Phoenix (136.5 MW) lead the pack with the highest future inventory under construction in the world.
Blockchain and demand from cloud providers have motivated growth in the industry, with the Austin, TX and San Antonio areas and Northern California seeing the most cloud activity as a percentage of total absorption, since they are close to end users in the tech industry.

Dive Insight:

JLL notes fears of a trade war and predicted recessions around the world could have dented growth, but "users’ insatiable need for data center capacity continued to drive strength throughout the sector." That was especially true with the growth in blockchain, which has spread to sectors ranging from healthcare to automobiles and has motivated high demand for more data capacity.

For smart cities, more absorption of data centers is good news. That will not only accommodate cities’ growing interest in using blockchain to handle municipal proceedings such as real estate, but will help with the vast amounts of data necessary for Internet of Things (IoT) technology. Applications including connected vehicles, smart grids and responsive infrastructure require storage and processing of huge amounts of data, making access to huge data capacity a must for smart cities. As cities continue to expand their capabilities and data storage, the data center industry will continue to benefit.

Data center construction is also considered to be "where the action is," JLL executive vice president Curt Holcomb previously told Construction Dive. Northern Virginia has gotten a reputation as "data center alley” for its robust fiber infrastructure, cheap power costs and a bountiful supply of water for cooling. The JLL report notes that cloud demand has motivated Virginia’s growth. Phoenix, meanwhile, has also seen high absorption thanks to hyperscale and cloud provider expansion.