In Los Angeles, Darren Eades, JLL EVP, says that Los Angeles has been a relatively flat market with minimal large wholesale deal activity. “Most of the deals are smaller cage and cabinet deals. We are seeing a lot more activity in the market especially amongst the Colocation operators looking to diversify their service offerings to better compete in the ever evolving IT environment.”

The recent sale of the Garland Center has brought a once overlooked building back into the forefront of the conversation, he explains. “The ownership's willingness to do long term deals and deploy capital to attract and retain tenants has made it a real consideration.”

Further north in San Francisco, JLL EVP Raul Saavedra says that “Wholesale” demand—essentially, demand for single-user or contained space—is more robust than retail (shared or colocation space) demand but the San Francisco Bay Area has the second highest megawatt (MW) demand in the country (after Northern Virginia).

“At 57.6MW year to date, absorption this year has already outpaced last year. On the supply side, we are at historically low levels with very little new construction in the pipeline,” he says. “While nearby markets such as Arizona and Oregon may provide lower cost alternatives and incentives, markets like Santa Clara remain relevant because of cheap power rates relative to other nearby Northern California markets and proximity to technology companies. Silicon Valley Power, which services Santa Clara, has rates 40% lower than other providers in California.”

Data center providers such as CoreSite, DuPont Fabros and Vantage have done a great job of exercising discipline with new builds and much of the absorption is by creditworthy tenants, he tells GlobeSt.com.

In Denver, Mark Stratman Jr., an associate at JLL, says that Colorado—with its comparatively low utility rates and its central US location—is among the nation's most competitive data center markets and is buoyed by a heavy concentration of high-growth sectors like technology and healthcare. “OneNeck IT Solutions recently opened the first phase of its $20 million, 35,000-square-foot project in Denver,” he says. “The project is designed to accommodate up to five phases totaling 160,000 square feet. Upon completion, the facility will help meet demand for managed services in the Rocky Mountain region and will serve as a disaster tolerance and avoidance location for those outside the region.”

Other recent, significant data center transactions include the remaining buildout of ViaWest's Compark 140,000-square-foot facility and the currently-under-construction 64-acre T5@Colorado Campus.

Phoenix-based Mark Bauer, JLL managing director, says that CyrusOne, IO Data Centers and Digital Realty Trust have been actively building in Phoenix for years, but a lull in construction in 2014 and 2015 has put the market in a shortfall for space. “These developers have responded with multiple new projects that will deliver significant new space in the next six to 12 months, including 120,000 net, raised, square feet by CyrusOne in Chandler, 550,000 gross square feet under construction by Aligned Data Centers in Phoenix, and rumors of a gross 700,000-square-foot, three-story project by IO in Phoenix.”

Check back with GlobeSt.com in the next few days for the last installment of this Q&A series where we talk to the executives about what the future holds for data centers in their markets.

Part 2 of 3

SEATTLE—In part one of this three-part exclusive Q&A, we chatted with sources across the west coast about what industries were driving data center activity. In addition to tech, sources said that there is increasing interest among Asian corporations looking to enter the market or expand their current presence. In part two, we asked those same executives to describe the supply/demand dynamic in their market.

Conan Lee, managing director of JLL in Seattle, says that the Pacific Northwest benefits from an abundant supply of sustainable power—80% of total power in the region is estimated to come from hydro sources—so the cost of owning and occupying of data centers in this region is much lower than the national average.

“This is driving both supply and demand,” he says. “The data center and colocation inventory in the market totals 3.725 million square feet and 343 megawatts (MW) with 485,500 square feet and 53.15 MW currently vacant and another 185,000 square feet (19MW) under construction. Year to date, the market has absorbed 22.25MW of capacity, making the Pacific Northwest the second most active data center market on the West Coast behind the San Francisco Bay Area.”

In Los Angeles, Darren Eades, JLL EVP, says that Los Angeles has been a relatively flat market with minimal large wholesale deal activity. “Most of the deals are smaller cage and cabinet deals. We are seeing a lot more activity in the market especially amongst the Colocation operators looking to diversify their service offerings to better compete in the ever evolving IT environment.”

The recent sale of the Garland Center has brought a once overlooked building back into the forefront of the conversation, he explains. “The ownership's willingness to do long term deals and deploy capital to attract and retain tenants has made it a real consideration.”

Further north in San Francisco, JLL EVP Raul Saavedra says that “Wholesale” demand—essentially, demand for single-user or contained space—is more robust than retail (shared or colocation space) demand but the San Francisco Bay Area has the second highest megawatt (MW) demand in the country (after Northern Virginia).

“At 57.6MW year to date, absorption this year has already outpaced last year. On the supply side, we are at historically low levels with very little new construction in the pipeline,” he says. “While nearby markets such as Arizona and Oregon may provide lower cost alternatives and incentives, markets like Santa Clara remain relevant because of cheap power rates relative to other nearby Northern California markets and proximity to technology companies. Silicon Valley Power, which services Santa Clara, has rates 40% lower than other providers in California.”

Data center providers such as CoreSite, DuPont Fabros and Vantage have done a great job of exercising discipline with new builds and much of the absorption is by creditworthy tenants, he tells GlobeSt.com.

In Denver, Mark Stratman Jr., an associate at JLL, says that Colorado—with its comparatively low utility rates and its central US location—is among the nation's most competitive data center markets and is buoyed by a heavy concentration of high-growth sectors like technology and healthcare. “OneNeck IT Solutions recently opened the first phase of its $20 million, 35,000-square-foot project in Denver,” he says. “The project is designed to accommodate up to five phases totaling 160,000 square feet. Upon completion, the facility will help meet demand for managed services in the Rocky Mountain region and will serve as a disaster tolerance and avoidance location for those outside the region.”

Other recent, significant data center transactions include the remaining buildout of ViaWest's Compark 140,000-square-foot facility and the currently-under-construction 64-acre T5@Colorado Campus.

Phoenix-based Mark Bauer, JLL managing director, says that CyrusOne, IO Data Centers and Digital Realty Trust have been actively building in Phoenix for years, but a lull in construction in 2014 and 2015 has put the market in a shortfall for space. “These developers have responded with multiple new projects that will deliver significant new space in the next six to 12 months, including 120,000 net, raised, square feet by CyrusOne in Chandler, 550,000 gross square feet under construction by Aligned Data Centers in Phoenix, and rumors of a gross 700,000-square-foot, three-story project by IO in Phoenix.”

Check back with GlobeSt.com in the next few days for the last installment of this Q&A series where we talk to the executives about what the future holds for data centers in their markets.