Data Center Supply and Demand

Part
01
of two
Part
01

Data Center Supply and Demand

Between 2016 to 2022 the North American data center market will grow by 9%, from 240 MW to 369 MW. In addition, Canada in particular is expected to maintain an equilibrium between supply and demand. Overall, there are some large projects underway in this area which are expected to boost the market, such as CyrusOne's project.

MARKET GROWTH OVER 3-5 YEARS

The North American data center net absorption market is expected to grow from 240 MW to 369 MW in 2022, representing a growth of revenue from $21 billion in 2016 to $31 billion in 2022. Overall, this represents a growth rate of 9% from 2016 to 2022 for the North American region.

Per annum growth the absorption for North America will be as follows
Year: Net Absorption in MW:
2017 240
2018 262
2019 285
2020 311
2021 339
2022 369

SUPPLY VS DEMAND

Further to this, I have found data on inventory vs vacancy (supply vs demand) in terms of MW for all the major North American data centers as was requested:

Inventory(MW)/Vacancy(MW)/Net Absorb(MW)
Northern Virginia: 608/35.2/41.5
Chicago: 188/4/4.2
NewJersey/new York: 115/28.2/29
Atlanta: 117/10.8/3
Boston: 60/14.7/1
Montreal: 30/44/17.3
Toronto: 193/70/14.3

After a thorough search, I can conclude that there is no specific data available to say exactly how much supply and demand per state will change over the coming years. I looked through online articles, news stories, and statistics databases, but I have concluded that this data has not been publicly released. However, above I have identified that growth for the entire region will be at 9% overall from 2016 to 2022.

Specifically, in the Canadian region, there is expected to be a continuation of equilibrium with demand and supply. However, some areas, such as Montreal, are seeing a decline in vacancy (8.5% to 6.9%).

FUTURE PLANS AND CONSTRUCTION

I have found the current absorption and total under construction in MW of all the major cities requested:

Major Data Center 2017 Absorption Under Construction
Montreal 12.23 MW 24 MW
Toronto 5.0 MW 39 MW
Northern Virginia 115 MW 22 MW
New York 1.1 MW 4 MW
New Jersey 4.5 MW 4 MW
Boston 4.2 MW 6 MW
Chicago 44 MW 34 MW


In addition to this, I have found that US-based CyrusOne, a real estate investment trust that invests in carrier-neutral data centers, is expected to deliver a 22.5 MW build-to-suit facility in 180 days for $6.4 million per MW.

CONCLUSION

To sum up, the North American data center net absorption market is expected to grow from 240 MW in 2016 to 369 MW in 2022, representing a growth of 9%. Overall, there will be more or less an equilibrium between supply and demand, with Canada, in particular, reflecting this.
Part
02
of two
Part
02

Data Center Investments

Private funds that are investing in data centers in North America include Equinix, Digital Realty Trust, Flexential, Digital Bridge, CyrusOne, and CoreSite. In addition to identifying these companies, I've looked into each one to find examples of their recent investments, including where and why they are investing and the value of their investments. While all of these companies are based in North America, some of them are global companies, so I've included some global investment examples to paint a more accurate picture of each company's investing activities; however, I've also made sure to include specific examples from North America for every company. You'll find a deep dive of my research below.

data center investment firms


EQUINIX
According to this article, Equinix is the market leader in data centers. The REIT operates in three core segments: the Americas, EMEA, and APAC. The company's recent data center investments include:
1. Acquired Infomart Dallas data center, an $800 million acquisition. This acquisition "broadens Equinix capabilities by strengthening interconnection density on the Equinix global platform; providing opportunity to accelerate business relationships in industries such as banking, technology, energy and healthcare; and supporting the Equinix enterprise offering."
2. Acquired Australian data center company Metronode, including 10 data centers, for $790 million. The goal of this acquisition was to strengthen Equinix's leadership position in the APAC market and to support the global growth of the company and its clients.
3. More than $500 million invested in capital expenditures for organic expansion of existing data centers.

This company is a real estate investment trust specializing in data centers. It's one of the largest REITs in the world, with 157 operating properties and 2,300 customers. Just in the last year, Digital Realty has expanded its operations in such international locations as Germany, Japan, Silicon Valley, Atlanta, and Australia. This includes the following investments:
1. A second data center near Frankfurt, Germany, the second largest data center market in Europe. The goal of this investment was to support the global growth of Digital Realty customers and to establish "a carrier-neutral and fibre-rich connectivity hub with access to major carriers, Internet service and exchange providers, as well as leading global cloud service providers."
2. Acquisition of a data center in Chicago for $315 million and a data center in Virginia for $34 million.
3. A joint investment venture in Japan with Mitsubishi Corp. involving three properties and $350 million. According to Digital Realty's CEO, "Japan is a highly strategic country for Digital Realty's global data centre platform, and this relationship with Mitsubishi Corporation represents a major step towards strengthening our presence in Japan."
4. Expansion of the firm's Silicon Valley data center, a $75 million investment project. According to an industry analyst, the expansion "builds on the foundation the company has established, giving enterprises, network operators and service providers the opportunity and the expertise they require to privately interconnect with critical ecosystems like the cloud."

Formerly known as Peak 10, this company merged with competitor ViaWest in 2017 to form Flexential Inc., now one of the largest data center companies in North America, with 41 data centers and 4,200 customers. The company's recent investments include:
1. Peak 10 acquired ViaWest for $1.7 billion to form the new company, Flexential. The merger doubled the company's geographic presence and expanded it to the West Coast.
2. A 100,000 square foot expansion of the company's Oregon data center in order to accommodate high demand in the area.
3. Acquisition of a large data center in the Philadelphia region for $33 million. The intention behind this acquisition was to offer customers benefits such as "increased scale, a coast-to-coast data center presence and a comprehensive and robust suite of IT solutions.

Investment company Digital Bridge focuses on investing in communications infrastructure, including data centers. Recent investments from this firm include:
1. Acquired Dallas-based data center company DataBank, including the company's six data centers. The financial terms of the deal were undisclosed, but the deal gave Digital Bridge entry into the data center market and a geographic presence in three major cities.
2. Acquired C7 Data Centers in Salt Lake City for an undisclosed amount to continue the company's expansion in the U.S.
3. Acquired data center facilities in Pittsburgh and Cleveland from 365 Data Centers. According to this article, "DataBank considers the data centers in Cleveland and Pittsburgh 'key interconnection assets' and plans to leverage them as 'anchors' for further expansion in the two markets."

CYRUSONE
This real estate investment trust specializes in carrier-neutral data centers and, while based in the U.S., has a global presence. CyrusOne's recent investments include:
1. $100 million investment in GDS Holdings Limited, a leading data center provider in China, to expand the company's global footprint and create cross-selling opportunities.
2. Invested in a 44-acre campus near Atlanta, which will be the future home of three data centers. The project will serve "the company’s expanding customer base of hyperscale cloud providers and Fortune 1000 enterprise customers."
3. Acquired Zenium Data Centers for $440 million, expanding its presence in London and Frankfurt, Europe's two largest data center markets.

CORESITE
Another real estate investment trust, CoreSite operates 17 data centers across eight North American markets. The company had a total $213 million worth of data center projects under construction at the end of 2017. Recent investments from the company include:
1. Purchase of two acres of land near Chicago for $4.5 million, on which CoreSite plans to develop a turn-key data center to expand its Chicago presence.
2. Development projects under construction: a $22 million center in Reston, VA; a $45 million center in Los Angeles; and a $17 million center in Washington. All of these centers will expand CoreSite's presence and capabilities in these markets.
3. Initiated a 10-year, $20 million lease to expand to a new data center in Washington, D.C. The goal of the expansion was to "meet the new demand generated by our DC1 facility, which is the premier network-centric colocation facility in the Washington, D.C. sub-market. DC1 has more than 60 network, cloud and IT service providers among our customer community."

conclusion

To wrap up, private funds that are investing in data centers in North America include Equinix, Digital Realty Trust, Flexential, Digital Bridge, CyrusOne, and CoreSite.
Sources
Sources

From Part 02