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DATA CENTERS
Trends in Data Center Site Selection A lack of space and developable land as well as power constraints will continue to drive data center site selection, with sustainability considerations and emerging technologies becoming increasingly important factors. By Pat Lynch, Senior Managing Director; and Josh Ruttner, Senior Research Analyst; Data Center Solutions, CBRE
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hat makes a good location for a data center? There are quite a few factors, and some of the most important are the availability of space, land, and power. However, emerging technologies that will require edge computing — such as 5G, virtual reality and metaverse applications, AI, and self-driving cars — and sustainability and access to green energy are increasingly important considerations for data center site selection.
suburban locations like Hillsboro.3 CBRE ranks Portland second in the nation for tax incentives, with taxes representing only 2.7 percent of the data center project cost, significantly below the average of 8.7 percent.
Low Vacancy Rates
Edge Infrastructure
Market demand for data is constantly rising and must be matched by a dramatic rise in data center construction. Available data center space in major cities is severely limited. For example, popular markets like Northern Virginia and Silicon Valley have low vacancy rates of 5.1 percent and 1.6 percent, respectively. Finding suitable and available data center space in such low vacancy markets can be challenging, especially if a user only has six months to work with. The primary headwind for new construction in popular data center markets is limited developable land. We anticipate more vertical construction of data center space in these low vacancy markets to create opportunities to meet demand.1
Consumers today require faster prcessing speeds to access content related to 5G, virtual reality, and AI. In the not-so-distant future, technologies like self-driving cars and the metaverse will require edge infrastructure. All these emerging technologies are significantly changing the way we think about data center site selection, as they require lower latency and more info to be exchanged rapidly to avoid lag or delay. This will result in a need for digital infrastructure that is closer to end-users, which will bolster demand for edge data centers, which deliver faster services, with minimal latency, in suburban locations. Investments in edge computing are increasing and expected to climb substantially in 2022, with
Power Constraints Power constraints are also a major concern right now in high-demand primary markets and will remain the biggest threat to new developments. This lack of land and power availability has caused some data center migration from major cities to select suburban locations throughout the U.S. A prime example is Hillsboro, Oregon, which is in the middle of two of the biggest tech hubs in the U.S. — Silicon Valley and Seattle. According to Data Center Frontier,2 companies can save approximately 25 percent in operating expenses by relocating their data center use to Hillsboro from Silicon Valley, due to Oregon’s lack of sales tax and potential property tax exemptions in
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5/26/22 1:00 PM
