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Demand for Online Content Causing Data Center Surge

CHICAGO—With cloud adoption racing ahead at break neck speed, this year the top 17 North American markets for data center facilities have seen record absorption of data center space totaling 274.2 MW, according to JLL.

By Brian J. Rogal | brianjrogal | | Updated on July 28, 2016

 

chi-ch2Data_Center_Empty_0 (3) DuPont Fabros’ colocation center at 2299 Busse Rd. in Elk Grove Village, IL.
CHICAGO—The demand for online content such as movies, videos, apps, social media and photos is expected to double the size of the North American data center industry by 2021, according to JLL’s latest data center report . And key metro areas such as Chicago and Northern VA, among others, will see developers launch millions of square feet in new facilities. But the rapid evolution in consumers’ data use also means that providers may shy away from leases that lock them into certain spaces.     “Cloud services, digital content and new data sovereignty laws are setting the data center market on fire,” says Bo Bond , central region lead for JLL’s data center solutions group. “ Demand is historically strong, so the onus is on the data center operators to build space fast enough, while also accommodating shorter, more flexible lease structures that have become highly popular as data strategies have evolved.” Another significant change to the sector is that countries have begun regulating where the cloud ‘lives,’ and requiring that providers store data in the countries from which it is accessed. This has already spread the development of data centers to nations outside the US and Canada such as France, Russia and Brazil, a trend that JLL expects to accelerate. But company researchers do not expect these changes to slow down the North American market. As reported in GlobeSt.com, multi -tenant data center providers in the US earned revenues of $115.3 billion in 2015 and experienced 6.1% growth. And with c loud adoption racing ahead at break neck speed, this year the top 17 North American markets for data center facilities have seen record absorption of data center space totaling 274.2 MW.     Northern VA was the standout in 2015, and this year its robust fiber networks, attractive incentives, and large market share of cloud operators, among other factors, has cemented its place as the continent’s true hotspot. Developers there have 1.13 million square feet under construction and plan a further 2.67 million square feet of new data center space. The JLL report also highlights the stupendous growth of demand in the Chicago area, where available space has become scarce. “All major providers are in the process of next-phase speculative builds due to ‘just in-time’ cloud requirements.,” the report notes.     “Cloud services will continue to be the primary demand driver in North America,” says Bond. “The industry’s biggest players are ready for it. They are upping their game with smarter capacity planning and virtualization strategies to meet the growing demand for this very specialized space.”

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