The transition of valuable data and memory storage to the cloud has become the new normal for technology consumers worldwide. The cloud’s rising popularity has large content enterprise users like Microsoft, Yahoo, Apple, Amazon, Verizon, Facebook and Google creating million+ square foot, multi-building mega-fiber complexes, called Hyperscale Data Centers, around the world – and nearly half are located in the U.S.
Credit: Fiber Locator
The number of Hyperscale Data Centers is projected to grow from 259 at the end of 2015 to approximately 485 by 2020 – and will represent 47 percent of all installed data center servers by 2020.
This unprecedented growth has created new trends in the industry.
Growing Secondary Markets
Credit: Fiber Locator
Historically, data centers have been strategically centered around “NFL Cities” like New York, Chicago, Los Angeles, Seattle and Dallas. Northern Virginia, in the Washington, D.C. region, accounts for more than one-third of 2016’s total 195 megawatt net absorption.
Rising consumer demand has caused a spike in secondary markets. Surprising locations like Salt Lake City, Louisville, Omaha, Cheyenne and Kansas City are seeing a surge in data center development, propelling job growth in these regions.
With more people than ever subscribing to streaming services and turning to the internet for social media, the demand for data center service usage is unlikely to slow – causing continued growth in secondary and tertiary markets around the world.
Credit: Fiber Locator
Hyperscale Data Centers house large amounts of critical information and hardware for big enterprises and its users. Big cloud providers are constantly seeking space in major markets, leasing in record capacity from data providers in 2016. The location of a data center is critical to ensuring the facility runs securely and efficiently.
One of the most important things site selectors look for is a safe natural weather environment. Various natural disasters like earthquakes, hurricanes and tornadoes pose significant risks to data center facilities and the sensitive information they store.
Site selectors are also looking for locations that can offer affordable and quality construction with quick connectivity and easy access to main underground fibers.
Because data centers now absorb power at alarming rates – the most recent numbers show that U.S. data centers consumed 70 billion kilowatt hours in 2014 -- access to renewable energy is a huge priority for large data center facilities in 2017.
The Rise of Reno
One of the areas seeing an explosion in interest from big companies for new data center locations is Reno, Nevada. Large businesses like Apple and Tesla are investing significant amounts of money in “The Biggest Little City in the World” to create and expand data centers to serve its customers.
In May, Apple announced it will spend $1 billion to double the size of its current data center in Reno and add at least 100 new employees to support it. The tech giant has already invested $1 billion in the facility and currently employs 700 workers in the region.
Feeling the heat from competition, Google acquired 1,210 acres of land a few miles south of Tesla’s Hyperscale Data Center in Reno for $29.1 million. The Wall Street Journal speculates that the land will be used to create a new data center in Reno for Google.
Reno’s popularity with large enterprise users can be attributed to its safe location, proximity to main fiber channels and access to renewable energies.
The growth of Hyperscale Data Centers is unlikely to see a slowdown anytime soon: Investment management company JLL reports that cloud adoption acceleration will double the size of the data center industry over the next five years. Annual global cloud IP traffic will reach 14.1 ZB (1.2 ZB per month) by the end of 2020, up from 3.9 ZB per year (321 EB per month) in 2015.
About Will Steffens
Will Steffens is the director of Sugarloaf Associates LLC, an affiliate of Biggins Lacy Shapiro & Company (BLS & Co.), that provides comprehensive energy services and procurement. Steffens has nearly 35 years of utility experience with Public Service Electric & Gas Company (PSE&G) in business / economic development and commercial real estate. While at PSE&G, he founded its utilities data center practice, which produced over eight million square feet of data center development in New Jersey.