MINNEAPOLIS—According to a new report by JLL, the data center industry in Minneapolis is currently overbuilt, the result of six new providers entering the market with new or redeveloped projects. However, company experts remain optimistic that increasing demand by corporate users will soon fill up existing vacancies and eventually touch off even more new construction.

"The supply outpaced demand and the demand just needs to catch up," Brian Ginkel, managing director and founder of the data center practice group in JLL's Minneapolis office, tells GlobeSt.com. He estimates that the region has about 560,000 square feet of total inventory, and about 337,000 square feet of vacant space.

However, it is probably not very meaningful to evaluate the use of data space with the same tools used to gauge an office or industrial market. "This is a niche real estate market," he points out, dwarfed by the 120 million square feet of office space in the region, and furthermore, data center providers don't suffer much from leaving this relatively small amount of space vacant for a short time.

And the prospects for MN data centers do seem bright. Forbes recently tagged the Twin Cities as the nation's fastest growing tech market, "and with tech companies comes the need for data centers," says Ginkel. In fact, JLL research shows that demand for data center space has increased three-fold in just the past 24 months.

"The increasing role of big data in so many business sectors, and the lengths that are necessary to protect that data, are among the factors that continue to drive evolution and activity in the data center industry, in Minneapolis/St. Paul and across the country," he adds. "I don't think this is much of a risk. By the end of 2016 a lot of this vacancy will have been absorbed and perhaps all of it sometime during 2017."

Perhaps the most notable change here has been the substantial growth by national, third-party providers such as CenturyLink, Stream Data Centers and Via West. "That validates the market as an option for large corporations that have facilities all over the country," Ginkel says. A company looking for data center space in the Midwest now "has an option outside Chicago. We're no longer just a flyover city."