Where Are The Data Centers?

DALLAS—With Dallas-Fort Worth coming in second only to Northern Virginia in terms of data center activity, this trend is expected to continue as opportunities for large tenant deals expand to a wider pool of options. CBRE recently released a report on the DFW data center market, indicating that rates are at historic lows, including low electricity rates (3.8 cents to 6.5 cents per kilowatt hour).

Low power costs, abundant fiber connectivity, attractive tax incentives and a low hazard-risk profile combine to make DFW attractive. As a result, enterprise users from social media to financial services firms are taking advantage of those market dynamics.

There was steady leasing activity in the first quarter with 9.4 megawatts of net absorption in the colocation market. Moreover, the construction pipeline is strong with 47.4 megawatts under construction, the report indicates.

Large public cloud providers thus far have not been big players in the DFW market, but CBRE anticipates increased public cloud activity in the next 12 to 18 months. And, as rental rates remain attractive throughout Texas, a variety of different industries such as healthcare and telecom are looking to capitalize.

Last year, M&A and consolidation resulted in 48 deals valued at nearly $20 billion (larger than 2015 and 2016 combined) across the country. This trend will continue in 2018 and remain in place many years from now as several major players continue expanding scale and expertise, according to JLL.

The data center industry continues to mature—and enterprises are looking outward. In 2018 and beyond, users will consistently seek add-on services and outsource data center expertise as models such as hybrid architecture with local cloud or extensions to hyperscale providers become the norm.

Furthermore, foreign data center companies are expanding global footprints, and the US is a primary target. As international enterprises aim to reach the masses, a jump in interest and activity is expected in both primary and secondary North American data center markets, says JLL.

Of course, data centers have become exponentially more complex in recent years. Yet this applies to every facet of the business: facilities, hardware, user requirements and solutions. The industry’s need for remote monitoring, cloud-based management and customized deliverables will likely catapult centers forward in the coming years.

All of these indicators bode well for the data center discussion at RealShare Texas on June 6 being held at the Belo Mansion, 2101 Ross Ave. in Dallas. Moderator Jared Hays, president and founder of the Law Office of Jared W. Hays will lead the panel including speakers Rob Nash-Boulden, director of data centers at Black & Veatch, Ryan Oro, senior vice president of revenue at EdgeCore Internet Real Estate, and Chris Crosby, founder and CEO of Compass Datacenters. The group will provide insights into the sector and opportunities for growth, for example exploiting the demand from cloud service providers and other upcoming IT solution providers.

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