This probably won’t shock you, but Northern Virginia has no more room for data centers. As of last count, there are 245 centers owned by 52 operators and covering 25,000,000 square feet and consuming 3.6 GW of power.
California isn’t much better, with 208 data centers owned by 63 operators, and 53 in Santa Clara alone.
Not surprisingly, the data centers in those areas have run out of room, power, water, and have worn out their welcome. The result is a movement away from the hotspots into new territory, where the search is on for cheap land and cheap renewable power.
But at the same time, some data center operators are moving into metropolitan areas. As much as there is activity outside of Columbus, Ohio, where power and space are plentiful, there’s also a lot of activity in Austin, Texas and Atlanta.
Andy Cvengros, managing director for data center markets in the Americas for data center builder JLL, said the places that have seen the most major growth are Ashburn, VA; Dallas; Chicago; Phoenix; and Santa Clara, CA. “What's happened is that absorption is doubled or tripled in some cases, and effectively tapped out all of the available power in those regions to accommodate the size loads,” he said.
As a result of that, you've seen a lot of new secondary markets pop up in somewhat close proximity to those core markets. That includes Columbus, Ohio, Salt Lake City, Reno, NV, and Austin, TX.
Clete Casper, director of real estate for data center provider Sabey, was a little more circumspect when discussing prospective data center locations, only identifying Austin as a potential city and preferring to think long term and look to areas that may not be on the radar today.
“We're looking for locations where our customers are interested in from the standpoint of talent, and we are looking for a very clear and straightforward path to a feasible development that would include available land, sustainable, clean power, and diverse, robust connectivity,” he said.
Power Rules All
In choosing a data center location, the availability of power is the first and foremost issue, said Alan Howard, principal analyst for data center colocation at Omdia. Everything else – like fiber backbones, tax incentives, and available land – falls in line behind power needs.
“The very first question is, ‘Can I get the power I'm going to need, and I anticipate I'm going to need,’” he said. “We've heard a lot of the data center operators talk about it like that – ‘if you can't give me the power then the rest is moot.’”
The problem with the power industry is that it is not consistent from state to state – or even universally compatible. A state with excess power sometimes can’t transmit to a state that is in need of it due to incompatibilities of hardware, notes Howard.
Not only are things different from state to state, but even within the same state. For example, Silicon Valley is powered by Pacific Gas & Electric, except for the city of Santa Clara, which has its own power company called Silicon Valley Power. Silicon Valley Power is about 25% cheaper than PG&E. That’s why so many data centers have sprung up there despite the region being seismically active.
“You know, it varies from city to city,” said Howard. “You may have different providers in different cities, with different timelines and challenges as far as the ability to meet your timeframe.”
The power industry is being overwhelmed by the data center market because of the latter’s rapid growth and expansion. Building a power station or a substation is a slow process; much slower than constructing a data center. The power industry never had to be so nimble before, but the intense power demands of the growing data center industry have changed everything.
“The timelines for these improvements to the transmission lines and the grid can vary wildly and are often subject to extensions and increased project schedules. So, in many cases, you're looking at three to four years for these infrastructure improvements to be completed with no real guarantee that that timeframe will be realized,” said Howard.
Rural vs. Urban
It also depends on the provider. Cloud service providers tend to pick isolated areas with cheap, plentiful, and renewable energy sources. The tiny central Washington town of Quincy (population 6,700) has almost a dozen data centers, and it is because the area has plenty of room and lots of hydroelectric power from the Columbia River.
But colocation providers like Equinix and Digital Reality Trust are sticking to the city because they want to be close to their customers and customers want to be close to their gear.
“The basic concept of the customer needing to be near their data center is still a component [of consideration], that if it's not easily accessible, that can be a challenge,” said Sabey’s Casper.
However, he added that “the opportunities associated with available – and clean – power take a higher priority in a lot of the instances from what the customer is looking for and what we look for.”
“To a certain extent, there's a convenience to get into these places that these folks [prefer], rather than them having to fly in [to a remote location],” said JLL’s Cvengros. “And they have to put in staff to build it and move construction crews and all that.”
Besides power, land, and fiber infrastructure, what else would a company look for in a data center location? Proximity to important markets for starters, says Howard.
“If I'm doing a large volume of business in Latin America, then I'm going to want to be somewhere that's on the border in Texas or in Phoenix or in Miami; that gives me good latency to Latin America,” he said.
