HOUSTON—Closing out a strong 2017, the global data center market is expected to continue surging for the foreseeable future. Even after a record-shattering 2016, cloud operators are still leasing data centers across all major North American markets, taking around 25% of available data center space in many major cities, according to JLL's 2018 Data Center Outlook. This year, continued cloud leasing and growing interest from international occupiers will be among the key drivers for the data center market.
“2016 was the year of the cloud, 2017 was the year of international exploration beyond US borders and 2018 will be the year of foreign interest,” said Mark Bauer, managing director and data center solutions co-lead, JLL. “Not only are international companies accelerating efforts to reach the North American masses, but pent-up demand still persists in some US and Canadian markets. While both 2016 and 2017 were banner years for the industry, the market should remain strong in 2018.”
Following a year defined by expanding global footprints, strong cloud leasing and record levels of M&A activity, several trends are shaping the data center industry in 2018 and beyond: add-on services are on the rise; foreign interest in the US will pick up speed; and there is continued growth of complexity, users, data center solutions and facilities.
“Incredible recent M&A activity is both leading and causing the significant uptick in data center facility and network complexity,” said Bo Bond, managing director and data center solutions co-lead, JLL. “Far beyond 2018, both operators and occupiers will be dedicated to innovations such as optimized IT functionality. This uptick in innovation should play out across the global M&A stage as key data center players strive to stay ahead of the game.”
Despite stagnant data center demand from the oil and gas industry, Houston's data center market boasts several positives from year-end. First, positive absorption, thanks to a boost from the healthcare sector. In addition, demand has diversified slightly from the previously dominant energy sector to include healthcare, telecom and technology services industries, GlobeSt.com learns. And, data centers in the Houston area weathered Hurricane Harvey as designed and showed incredible strength through the storm.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
