CSP Needs Drive Data Center Demand

An Equinix data center in Ashburn,VA. The Northern Virginia suburbs of Washington, DC constitute the nation’s largest data center market. (Photo: Equinix)

DENVER—Although a report earlier this month from Colliers International cited 10 up-and-coming industrial hubs that are positioned for the fastest growth, it’s a different story in the data center realm. “By a significant margin, the largest data center markets in the US continue to grow at the fastest pace, with demand driven largely by latency requirements, access to interconnection points and proximity to cloud hubs and large population centers,” CBRE says in its fourth-quarter report on the industry.

Net absorption for 2016 totaled 195 megawatts across the major data center markets as tracked by CBRE, slightly below the 200+ MW of absorption in 2015. More than one-third of that 12-month tally was accounted for by a single market: Northern Virginia, which saw net absorption of 84.4 MW. Nearly 98 MW of inventory were added to Northern Virginia’s supply in the past year, partly explaining a 170-basis point increase in the market’s vacancy rate to 4.6%, although that’s still the third lowest among the major markets behind Phoenix (3.1%) and Silicon Valley (4.5%), according to CBRE data.