Data center real estate activity is on the rise in Los Angeles, according to new research from JLL. Heightened demand for fast and reliable data and cloud services has fueled the growth, and as a result, data center absorption reached 6 million square feet last year. Cloud services specifically are driving the demand, accounting for 30% of the activity.

“Los Angeles has historically been a  flat data center market made up of smaller transactions driven by local demand,” Darren Eades, JLL Executive Vice President, tells GlobeSt.com. “We are finally seeing larger transactions taking place thus increasing the velocity in the market. In addition to the current base expanding its footprint we have seen large players like Google dramatically increase their footprint.”

The boost in activity has now sparked new construction activity. Los Angeles currently has approximately 9 megawatts of data center properties under construction. “There is a lot new development projects slated to break ground but many are in discussions to find new locations,” adds Eades. “The biggest 'development' is adding more power and infrastructure within their own facility.”

This year, activity is expected to continue to grow, building off of the momentum of 2017. “The outlook for the Los Angeles data center market is very positive and we hope to continue the momentum from 2017,” says Eades. “We expect to see many customers leave aging buildings for newer and more reliable data centers with state-of-the-art infrastructure so they can grow their footprint and keep up with their increased power demand.  I expect to see several large deals announced this year that will tighten the market even more.”

This year, activity will continue to be driven by similar players: providers and cloud services.  “OTTs will continue to drive the market due to the consumer demand for more content, reliability, speed and options,” says Eades. “There are over 2.5 billion digital consumers globally under the age of 25 that are demanding more, thus the providers are stepping up to deliver it.”