North American Data Center Market

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North American Data Center Market

Insights are provided on the drivers of demand and construction activity for the data center industry in the US on an aggregate basis, before a granular view is taken of the capacity being added by the top three data center providers in the market.

Industry Overview

  • According to Cloudscene, the top ten data centers and service providers in North America are, in descending order, Equinix, Digital Realty, Coresite, Cologix , CenturyLink, Zayo, CyrusOne, TierPoint, Cyxtera, and Flexential.
  • Digital Realty views the drivers of data center demand as artificial intelligence, the internet of things, autonomous vehicles, and virtual/augmented reality. The market forecast for these drivers include a dollar value for artificial intelligence in 2021 at $26 billion with a CAGR of 45%, shipment of 20, 415 million installed units with an industry CAGR of 34% for internet of things devices in 2021, 320,000 shipments of autonomous vehicles in 2021 at a CAGR of 37%, and a market forecast for virtual or augmented reality at $193 billion in 2020 with a CAGR of 78%.
  • Additional factors expected to influence market growth for data centers in the United States are the increasing prevalence of QLC NAND Flash Drives, Nickle-Zinc & Lithium-Ion Batteries replacing VRLA in data centers, hyperscale investments and procurement of renewable energy.
  • The data center industry was also advised to brace for supply chain interruptions, which can be exacerbated by the lack of close vendor relationships, non-standardized, non-uniform build processes, and regional characteristics.

US Construction Overview

  • Across North America, construction is taking place in Atlanta (14.3 MW), Austin/San Antonio (9.5 MW), Boston (1.8 MW), Charlotte/Raleigh (4.4 MW), Chicago (12.4 MW), Dallas/Ft. Worth (29.7 MW), Houston (4.5 MW), Montreal (55 MW), New York Tri State (15.2 MW), Northern Virginia (165.3 MW), Phoenix (32.6 MW), Seattle (10 MW), Silicon Valley (18.8 MW), Southern California (11 MW), and Toronto (13 MW).
  • Hyperscale developments are taking place in Atlanta (50 MW), Southern California (2 to 5 MW), and Toronto (location search phase).
  • In the South Eastern US, close to 50 projects are expected to become operational by the end of June 2020, while in the South-Western and Mid-Western US, close to 25 facilities that began construction, or which were opened in 2019, are expected to be operational in 2020.
  • Staffing shortages related to the COVID-19 pandemic is expected to impact on data center construction. Construction at the campus owned by Facebook in Altoona, Iowa was halted to "protect" construction crews during the pandemic. Construction activity has been significantly reduced by Facebook at its campuses in Oregon, Texas, New Mexico, Alabama, and Virginia.

Supplier Overview

  • Coresite
    • Coresite has ground-up developments in Chicago and Los Angeles, which are expected to be completed in Q2 and Q3/Q4 of 2020, respectively.
    • Data center expansions are projected for New York and Santa Clara, with expected completion dates of Q3 and Q2 of 2020, respectively.
    • Current data center expansion for Coresite is projected at 10MW, of which 11% is leased as of 31 March 2020. The company also has 25.5 MW planned for future data center expansions.
    • New developments currently under construction is projected to add 12 MW, of which 35% is leased. Planned new developments not currently under construction project the addition of 138 MW.
    • Guidance for data center expansion is estimated at $215,000 in the low range, $232,500,000 in the mid-range, and $250,000,000 in the high range.
  • Equinix
    • Equinix expects cabinet add-ons in the second quarter of fiscal year 2020 in Boston (550), Chicago (1,225), Dallas (1,875), Washington DC (1,600), Toronto (725). No North American add-ons are expected for Q3 FY2020, but in Q4, add-ons is expected for Washington DC (925). For 2021, Equinix expects cabinet add-ons for the facility in Silicon Valley (1,450).
    • The total for Q2 2020 is 6,075, Q3 2020 is 1,025, and Q4 2020 is 1,975. Expansions in 2021 is expected to total 2,200 in Q2 and 500 in Q3.
    • The CAPEX value of the expansions are $512 million for FY 2020 and $248 for FY 2021.
  • Digital Realty
    • Digital realty added 2,964 MW to its offering in Q1 of 2020. This is an increase of 407 MW over Q1 of 2019.
    • In the North American region, 88% of Digital Realty properties have been leased.
    • The market absorption to available current construction rate is 1.3.