December 13, 2016
The Dallas and Phoenix metro areas will be top data center markets again next year, according to real estate firms JLL and CBRE.
Last week here on the Aligned Data Centers blog we shared 2017 tech trend predictions from Forrester, Gartner, and IDC. We talked about IoT, cybersecurity, the (disappearing?) data center, and digital disruption. How will data center providers respond to these trends? To help us answer that question we turned to real estate advisers JLL and CBRE and their 2016-17 data center market forecasts.
“Demand in the Dallas area continues to come most robustly from financial services, insurance, healthcare, and technology,” writes JLL in its outlook report. “Continuing headquarter relocations and regional expansions are also driving demand.” For data center users, JLL predicts “aggressive pricing and ramp schedules” and “new options for powered shell facilities.”
A surge of demand for data center space in the Dallas area (which includes Plano) has the region hitting record levels of leasing velocity, but CBRE brokers say the biggest boom could still be yet to come. “We are predicting Dallas-Fort Worth to do another 40 megawatts this year, but next year could be stronger from the pipeline we're seeing in the market,” Brant Bernet, senior vice president and leader of CBRE's data center team, told the Dallas Business Journal. That’s not surprising, given that the Dallas area has long been a top data center market (read 7 reasons why).
Demand for Phoenix data center space comes in large part from West coast companies looking to move to a lower cost, less disaster-prone location without increasing latency significantly. The largest user base in Phoenix is the technology industry, though there is strong demand in the banking & financial services and retail & ecommerce industries as well. “Market trends demonstrate an increased absorption by cloud and Software-as-a-Service (SaaS) companies,” writes JLL in its outlook report. “This trend has been a result of the migration by enterprises away from traditional data center build-outs as they transition their infrastructure and software needs toward a public or private cloud environment.”
JLL calls Phoenix a “user-favorable market” that “provides competitive pricing and flexibility as new supply is delivered.” The real estate firm called out Aligned Data Centers’ new facility specifically, saying that new contiguous space will be available in Phoenix when the first phase of our 550,000 square-foot, 62 MW data center opens. And a trend that aligns well with our offering, “tenants are beginning to prioritize flexibility for expansion or reduction in square footage and power density,” according to JLL.
Like Plano, Phoenix has long been a top data center market (learn more about why).
With the data-eats-the-world trends we described last week, demand for data centers will continue to rise. But as the pace of innovation continues to accelerate, prospective colocation tenants would be wise to look for data center providers who can innovate right alongside them, topping the data centers lists not only next year, but well beyond.
As we near the end of 2016, pundits are assessing how internal and external forces will impact businesses in 2017. Not surprisingly, projections for the New Year are largely focused on accelerating digital transformation, its impact on business, and the infrastructure that underpins it.
Meet Jeanine Aliberti, Marketing Director in Client Communications at Aligned Energy, and learn about her love of adventure, at work and play.