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From Site Selection magazine, March 2021

2020: When Your Data Center Becomes Your Real HQ

Report reinforces how your digital footprint is more important than your physical one.

Data Centers
All photos courtesy of Iron Mountain
by Ron Starner

Last year delivered plenty of wakeup calls to corporate real estate executives, but perhaps none bigger than this: Your site selection process for your company’s data center operations now carries more importance than your site selection for your corporate headquarters.

In a world where remote work has become the norm for most non-industrial jobs, the headquarters facility has become a ghost town. Taking its place in critical importance is the data center, the lifeblood of your company’s entire global operation.

Data CenterData Center WorkerIron Mountain Exterior

The data center is what keeps you connected to your employees, your employees connected to each other, and your company connected to your suppliers and customers. Take it away, and you’re out of business. Slow down or interrupt its performance, and you’re non-competitive. Worst of all, place it in the wrong location, and you’re fired.

If the new 2021 Cushman & Wakefield Data Center Global Market Comparison Report taught us anything, it is that your data center is now the single most mission-critical facility that your company owns or leases. Here’s how C&W puts it: “Data centers, once an afterthought for global enterprises, are now a cornerstone of the information economy.”

More than $100 billion has been invested into this asset class over the past decade, according to the C&W report. The study evaluated 1,189 data centers around the world and used a unique weighted methodology to rank 48 global markets and produce an Overall Top 10 ranking. Key emerging data center markets were also identified as 10 Markets to Watch.

Among the report’s key takeaways were these:

  • Companies shifted rapidly to the cloud as the 2020 pandemic accelerated the pace of change in corporate IT strategy. This shift will continue for several years as companies place an even greater emphasis on cloud services and connectivity across platforms.
  • Construction of new data center product skyrocketed, as the 1.6 GW under construction last year across the markets studied mushroomed to 2.9 GW in 2020. “This is the equivalent of nearly two-and-a-half Northern Virginias being added to global supply, most of which has been spoken for,” the report states.
  • Secondary markets continue to gain importance. Many of these are in Europe and Asia, and they often provide greater margins, notes the report.

Dave Fanning, executive managing director and data center advisory group leader for Cushman & Wakefield, says there were several trends highlighted by the new study. The biggest markets grew even bigger, several emerging markets inched closer to top-tier status, and the overall trend toward more data usage is forcing companies to place a “bigger priority on their digital footprint than their physical footprint now,” he says.

Overall Top 10 Data Center Markets Worldwide

  1. Northern Virginia
  2. Chicago
  3. Sydney
  4. Silicon Valley
  5. Singapore
  6. Dallas
  7. London
  8. Seattle
  9. New York/New Jersey
  10. Amsterdam
Source: Cushman & Wakefield, 2021 Data Center Global Market Comparison

As the big got bigger, no place capitalized more on that in 2020 than Northern Virginia, notes Fanning. “Northern Virginia, anchored by Loudoun County, is continuing its dominance and getting even more dominant as the No. 1 overall data center market in the world,” he says. “The demand simply does not subside in this market. It remains a very business-friendly region for developing and building data centers with very reasonable power costs and high-level connectivity. It has the most robust fiber connections in the world. Every major and mid-sized cloud services provider in the business is located there.”

Secondly, Fanning notes, several emerging markets are well on their way to joining that top tier. Among them, he says, are Toronto, Montreal, Portland-Hillsboro, Phoenix, Atlanta and San Antonio. “Atlanta is a market that has always been full of promise,” he says. “2020 was a very strong year for Atlanta. San Antonio is getting there too. Government-driven data centers are driving a lot of this.”

Finally, he adds, your digital footprint will ultimately determine your success as a company, particularly if your stock in trade is information. “More and more data is being created in order to make intelligent decisions,” says Fanning. “This data needs to be collected, transmitted and processed. As AI, machine learning, remote learning and remote work become ever more prevalent, we will see increasing demand for data centers.”

Another report, this one put out by Cisco, quantifies it. In 2021, daily internet traffic will reach 7.7 exabytes — the equivalent of 7.7 billion GB or 1.9 billion DVDs, marking a 50% increase compared to daily usage in 2020.

Get ready to see a lot more data centers coming soon to sites near you.

Ron Starner
Executive Vice President of Conway, Inc.

Ron Starner

Ron Starner is Executive Vice President of Conway Data, Inc. He has been with Conway Data for 22 years and serves as a writer and editor for both Site Selection and the company's Custom Content publishing division. His Twitter handle is @RonStarner.


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