By Kate Snyder
Despite challenges from the state of the overall economy, activity in the data center market continued its steady pace first seen in 2021 and throughout 2022. According to a recently released report by Cushman & Wakefield, for the first time ever, Portland tied for the highest ranking data center market compared to other markets across the country as well as around the world.
“Portland’s rise is indicative of a number of smaller markets growing to be of key interest for the data center industry,” said Jacob Albers, research manager at Cushman & Wakefield. “Going forward, expect other secondary markets to see substantial jumps in rankings.”
Cushman & Wakefield’s 2023 Global Data Center Market Comparison is the fourth edition of the firm’s annual study which identifies and ranks the top data center markets globally and covers key emerging trends in the sector. For 2023, this report has been expanded to 63 global markets, including more than 1,600 data centers.
Data center markets across the globe were assessed within 13 different categories, including fiber connectivity, market size and cloud availability to determine the top overall markets as well as the top performers in each category. According to the firm’s research, the top 10 data center markets are Portland and Northern Virginia followed by Singapore, Hong Kong, a three-way tie of Atlanta, Chicago and Silicon Valley, then Dallas, Phoenix and Seattle.
Portland shared the report’s top spot with Northern Virginia, which received the top spot in the three previous reports. Northern Virginia is still the largest market with more than 2.5 gigawatts of capacity and vacancy at below 1 percent. Portland, by comparison, has less than 500 megawatts of capacity and vacancy below 5 percent.
The entire data center industry has faced a number of challenges in recent years from a variety of sources, the report details, but activity continues at a steady clip. Hyperscale tenants continued expansions across regions, with specific interest toward secondary and emerging markets. Co-location providers and developers have followed suit, driven by higher availability and lower prices for both power and land.
“The economic tumult of inflation, combined with rising interest rates and contraction in the tech sector has affected the entire data center industry,” the report stated. “During the first half of the year, the spike in energy prices had a noticeable impact on both active and pipeline projects. In some markets, utility companies increased electricity prices in response to energy availability, and as a result of supply chain issues and the instability brought about by the Russia-Ukraine war. Since then, energy prices have leveled due to a combination of supply chain improvements and government action.”
Portland rocketed from sharing 10th place last year to the top of the overall standings. According to the report, the city’s jump is due to the rapid expansion of hyperscale activity in the Hillsboro submarket as well as relatively favorable pricing, sustainability options, low environmental risk and more available land.
As far as development in Portland, the report cited a planned new build by QTS on behalf of Meta, with the prospective campus reported as requiring 250 megawatts of power at full buildout. The campus would be powered entirely by renewable energy via Portland General Electric, emphasizing the hydroelectric power available for large deployments throughout Portland and rural Oregon. Additionally, the report states that further large-scale construction remains very much in demand, with possible further cloud service interest along with potential relocations.
Other factors that contributed to Portland’s standing in the ranking included the fact that the city has no sales tax – a feature that it shares with just one other market that was part of the study, Hong Kong – as well as its low vacancy.
“The rush of post-pandemic activity in the data center space seen throughout 2021 continued in 2022, despite headwinds in the overall economy and resource challenges in some of the largest markets worldwide,” Albers said.