(TNS) -- The nation’s hottest data center destinations — including North Texas — are locked in a race to add capacity as demand for secure places to store digital information soars, a new report by the commercial property firm JLL says.
“The top three markets are going to interchange over the next few years,” said Bo Bond, managing director and co-leader of JLL's Data Center Solutions team. “That will just have to do with the supply and demand imbalance.”
In this round? Northern Virginia maintained its No. 1 status in terms of overall inventory, the report said.
But although Dallas-Fort Worth had previously rocketed to the second spot in some rankings, Chicago pulled far ahead of Big D in the first half of 2017, according to JLL.
Unlike other types of commercial real estate, data center inventory is measured in raw power rather than square feet.
Northern Virginia boasted 853 megawatts of inventory in the most recent JLL report, while Chicago posted 840 megawatts. D-FW came in third with 458 megawatts, followed by Northern California’s 424 megawatts.
Still, Bond said D-FW had Chicago beat by a metric that’s even more important than raw supply: absorption.
That’s how much of that storage capacity is actually booked up by data tenants, or the companies that don’t want to house giant servers for all the information they need to run their businesses.
And Bond said that as more and more data center ecosystems hit their stride, it’s a better indicator of how well-balanced regional markets are.
Northern Virginia absorbed a bit more data center capacity in the first half of 2017 than D-FW (41 megawatts, versus North Texas’ 27 megawatts), but that was actually a dip from its absorption over the previous year.
Meanwhile, D-FW’s absorption in the first half of 2017 was a 50 percent increase over the same time in 2016.
“The story on Dallas is we have a great demand pipeline and the ease to build,” Bond said.
The region also has an advantage in its lower power costs, which are the biggest expense for running vast stacks of servers, which need to be cooled.
Bond said that part of the reason D-FW is, in a way, playing catch-up to other markets is that its fast-growing business base is more diverse than Chicago’s, Northern Virginia’s or Northern California’s.
Northern Virginia’s data center inventory has built up as government users or government-related technology companies have demanded the space.
In Chicago, a concentration of financial services companies has anchored its data center market.
In D-FW, the same things that are attracting corporate investment in a variety of sectors is also driving a corresponding demand for data storage.
“We’re a mirror image ... of all the corporate relocations in many different industries,” Bond said. “We are a great menagerie.”
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