Demand Takes A Breather

Still on the Tucker Summer Trek America Tour. See you in September! In the meantime, here’s the summary 1st half 2019 data center market update.

#NoVA / #InternetCapitol had lower #datacenter absorption in 1H19 at 86MWs vs 173 MWs in 1H18, while exceeding 1H17 at 50MWs.  Keep in mind that no other #datacenter market in the world has ever exceeded 70MWs of annual absorption. I believe this reduction represents a momentary pause as demand takes a breath after an enormous 2018.

At the same time #InnovationAlley (Prince William County, VA; a major data center market southwest of Ashburn) had its best absorption EVER with nearly 25MWs in 1H19. #InnovationAlley had greater demand absorption than all collective east coast Tier 1 data center markets outside of #Ashburn / #DataCenterAlley. Altogether, Northern Virginia’s second largest submarket is now a top location for data center demand in its own right.

In comparison, most US #datacenter markets had significantly lower #datacenter demand absorption in 1H19. 

Vacancy continues to be flat in several Tier 1 markets (Atlanta, Boston, Chicago, Dallas, New York). International markets, FLAP (Frankfurt, London, Amsterdam, Paris) are poised for growth similar to 2014 US demand with modest initial deployments by hyperscalers and enterprises. The long term data center outlook has significant positive demand trends. 

Markets Transitioning

Presently, lower global data center absorption this year may be a hangover from 5 years of enormous and rapid demand. The timing required to deliver space, power, network, cooling, deploy, commissioning, refresh IT equipment, and the significant CapEx by hyperscalers and enterprises all are factors that have contributed to lower demand in 1H19.

Very simply, markets are adapting, and transitioning after years of rapid growth and record demand. This transition is also allowing new investment capital structures to be redefined as a result of past rapid growth. These new financial structures/players will also provide a more secure foundation for even greater future growth as more technologies and business processes generate even more data.  

Hyperscale Owners Building Campuses/New and Existing data center operators step in/up

Hyperscalers are rapidly building their own campuses (Google, Facebook, Microsoft, Amazon). Private data center operators continue to acquire land holdings to compete and lease new data centers to meet demand and provide new deliveries. Nearly 2/3 of all #NoVA demand in 1H19 was leased by private data center operators (CloudHQ, Stack Infrastructure, Vantage Data Centers). New data center deliveries by Aligned Energy, Compass Datacenters, RagingWire, Sabey Data Centers, Vantage Data Centers provide competitive solutions while the Public data center operators (CoreSite, CyrusOne, Digital Realty Trust, Equinix, QTS) have significant size and scale in their deliveries. #NoVA is defined as the most cost competitive market for hyperscalers, enterprises, network deployments, abundance of high quality utility power and massive new data transport networks.

PREDICTIONS and GAME CHANGERS......For more info, I'll be speaking Sept. 10, 2019 in Loudoun at:

and Sept. 24th & 25th DC/AC in Austin, TX: