Data center developers turn to emerging US markets

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Data center developers are under pressure to expand their horizons when it comes to choosing sites for new construction. Land prices, availability of power and bandwidth, and pushbacks from neighbors are among the factors that are driving developers to seek new regions.

Northern Virginia, for example, is home to more data centers than any other part of the world, with 275 and more on the way. But the region is running out of space and available power, and residents are running out of patience for these resource-intensive facilities that consume growing amounts of power and water, according to the Washington Post

Data centers gravitated to Northern Virginia for a multitude of reasons: available land, cheap power, tax incentives, and because the region holds a major connection to Europe. Underwater cables carrying high-speed Internet traffic between the US and Europe originate in Virginia, and data centers wanted to be as close as possible to that major internet exchange.

The same holds true on the West Coast; Southern California is a popular data center hotspot because of an underwater cable backbone running to Asia.

However, due to a shortage of power and land, data center developers are now being forced to look elsewhere for land, power, and water, according to the quarterly data center report from datacenterHawk.

“As a result, some companies that were considering Northern Virginia for their requirements are now opting for alternative locations such as Atlanta or Columbus. Similarly, requirements in California are shifting towards cities like Las Vegas, Salt Lake City, or Denver,” the report stated.

One emerging market is in Central Ohio near the city of Columbus. Google, Facebook, and Amazon have all built facilities there recently.

First and foremost, data center locations are chosen based on two specific criteria: availability of cheap and ample power, and availability of ample network bandwidth, said Ashish Nadkarni, group vice president and general manager of infrastructure systems, platforms and technologies at research firm IDC.

Real estate costs are also important, and in the past, rural Virginia was not too expensive. But that’s no longer the case. “I am sure the industry will figure something out. I don’t think the sky is falling yet, but if build-outs get more expensive, you’ll see providers raise costs,” Nadkarni said.

Locations that win in terms of network bandwidth, power availability and real estate costs will become the next hot place for data center build-outs, he added. Where a data center is located won’t make much difference to customers, beyond maybe having to drive further to visit a facility.

Copyright © 2023 IDG Communications, Inc.

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