JLL: Top 10 US markets for data center construction

Dive Brief:

  • Real estate research firm JLL's latest Data Center Outlook report identified the top 10 U.S. markets for data centers and found the Seattle-Portland area had more data center square footage under construction in 2015 than any other market.
  • JLL reported that employment growth in the data center market is in "continual growth mode" and is expected to grow 3.8% per year through 2020.
  • JLL reported Seattle-Portland had 352,000 square feet of data centers under construction last year. Chicago was close behind, with 345,595 square feet, followed by Silicon Valley (236,000) and Northern Virginia (203,000).

Dive Insight:

The remaining markets on JLL's Top 10 list for data center construction include: Houston, Phoenix, Dallas, Las Vegas-Reno, Austin-San Antonio, and Atlanta.

JLL reported that data centers are now key economic drivers for U.S. metros, with tax incentives encouraging construction. The research firm expects continued third-party data center employment and revenue growth over the next five years and consolidation among providers as more large companies shut down their enterprise data centers in favor of remote third-party providers.

In light of the growth in this sector, JLL said that state and local municipalities are competing to bring more data centers to their markets and cited Missouri and Texas as examples of states offering steep tax breaks in return for investment by data center owners.

JLL said energy producers should also benefit from data center growth, as many centers use wind farms and alternative energy sources for their long-term power needs.

Michigan is a testament to how much officials are willing to sweeten deals to bring data centers to their states. Switch will soon begin construction on a $5 billion data center in Grand Rapids, MI, after Michigan legislators passed a set of laws that exempt Switch, its "co-located" clients and about 40 other Michigan data centers from paying sales or use taxes on servers, computers and other equipment for 20 years.

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