Third quarter activity throughout the data center world continued many recent trends:
• incredible demand by the largest hyperscalers
• the growth of compute close to the end user leading to the creation of new markets
• and a push toward further efficiency in the data center environment
While these themes have become constant and familiar over the past three years, there are increasingly nuanced situations developing in several core markets globally, leading to further shifts in the location of potential deployments.
Reviewing regionally –
APAC
Excitement surrounding the re-launch of data center development in Singapore early in the quarter has been slightly tempered as further details of official policy have emerged, with builds likely needing to be very dense indeed to meet the small individual footprint and low PUE requirement. As data center builds grow in density, the research conducted at local universities in the areas of cooling and hydrogen will be key in establishing a more efficient data center environment.
Spillover to other markets continues, with Kuala Lumpur and Johor Bahru in Malaysia and the nearby island of Batam in Indonesia drawing further interest for larger builds. In interest in Batam is but a small fraction of the land rush that has continued of late in Jakarta, with major cloud services from both the US and China battling for market share in the country. Indonesia has welcomed players both domestic and international as it builds its own digital infrastructure, with apps such as Tokopedia, OVO and Gojek gaining millions of local adherents
Further growth is expected throughout Southeast Asia, with Thailand, Vietnam, and the Philippines gaining increasing interest due to their large and tech-savvy populations and relatively small national data center capacities. The average resident of each country spends eight to ten hours online each day, yet the largest currently operational market in these three locales is Bangkok at under 40 megawatts of total capacity.
Japan and South Korea continue to garner hyperscale builds, with ever-greater deployments required in multi-floor structures to save on initial land costs. The global megacities of Tokyo and Seoul continue to receive the major share of investment, albeit with a secondary Japanese market in Osaka rapidly scaling to primary size.
Investment throughout India has the potential to create a major powerhouse dwarfing all regional non-China markets, with Chennai, Bengaluru, Mumbai, Delhi/Noida, and Hyderabad soon to be followed by Pune, Vizag, Kolkata, and other major cities that have yet to develop into core data center markets. Hyperscale cloud services are pursuing a mix of self-builds and leases across India, suggesting a long-term strategy from each.
Americas
Growth throughout South and Central America was an accelerating topic throughout the third quarter, with several operators announcing further phases and/or developments particularly in Brazil and Mexico to meet hyperscale demand, in turn responding to local government and multinational requirements. The government of Brazil has pushed forward a digitization program over the past three years, with nearly three quarters of all federal government services now available online.
In Brazil, Sao Paulo will soon grow past 200 MW, with the potential of growing secondary markets following in Rio de Janeiro, Fortaleza (close to cable landings) and even smaller cities such as Recife.
Developments in the Queretaro area of Mexico have scaled a bit more slowly then initially expected due to power constraints, though demand remains extremely high thanks to available land outside of Mexico City proper. Over 250 megawatts of capacity are planned for delivery over the next five years, power availability permitting.
Santiago and Bogota top the list of growing secondary markets in region, with both receiving continued interest from mid- and large-size US cloud firms.
In the United States, demand continues unabated, with all primary markets slipping below five percent vacancy and markets such as Northern Virginia and Silicon Valley at their tightest ever. Core US absorption blew past 1.2 GW in the first half of the year, with once-secondary cities such as Phoenix, Atlanta, and Portland continuing their growth to true global primary sizing with 200, 100, and 165 megawatts taken respectively. Grid concerns have struck the once-invincible Northern Virginia, though local utilities in recent days have taken steps to mitigate delivery issues. Expect continued extreme demand to close out the year in the US, with further expansions continuing apace in South America.
EMEA
The core “FLAP-D” markets (Frankfurt, London, Amsterdam, Paris, and Dublin) remain in considerable demand, though with a continued moratorium throughout most of the Netherlands and a politically volatile environment in Ireland, these two longtime data center stalwarts are no longer possible for development.
Parliamentary debates on data center development in Dublin and regional Ireland were consistently in the news throughout the third quarter, with the prime minister suggesting that the industry is needed for the national economy and other parties concerned about the growing power usage and local utility EirGrid’s stewardship therein.
More will be coming on this front through the end of the year, though this opens the door for secondary markets throughout Europe to grow, including Madrid, Barcelona, Athens, and Milan, many of which were formerly overlooked but are in great demand thanks to relatively available power and undersea cable access across the world for coastal cities.
Links to the Middle East and Africa are particularly valued, with Nairobi and Mombasa in Kenya, Johannesburg and Cape Town in South Africa, and Lagos in Nigeria experiencing phased development as global cloud services pile in.
The Nordics, Southern Europe, and Eastern Europe will receive continued interest through the rest of the year, with new investment piling in to form growing data center clusters.
