Northern Virginia is renowned as the data center capital of the world. The three-county region currently hosts around 275 data centers, according to the Washington Post, and more seem to spring up every day. But this isn’t the only place developers and cloud providers are building – several other markets are emerging as hot new data center hubs. One of them is in Ohio, of all places.
Derrick Cardenas, VP of Portfolio Management at data center company Cyxtera, flagged Ohio, Atlanta, Phoenix, Portland, Minneapolis, Denver and Boston as “attractive up-and-coming markets” in an interview with Silverlinings.
While he didn’t specify a city in Ohio, Luke Kipfer, VP of Data Center Development and Construction for new data center builder PowerHouse Data Centers, filled in the blank in a separate conversation. While Kipfer also pointed to Atlanta and Phoenix as emerging hubs, he said the new hot spot in Ohio is New Albany.
Located just outside Columbus, New Albany is hopping with activity. Google broke ground on a new $600 million data center in New Albany in 2019 and two years later announced a $1 billion expansion project to triple the size of its data center campus there. Facebook also has a data center in New Albany and Amazon has been spending big on land in the city.
The Columbus Dispatch reported Amazon scooped up 93 acres at the intersection of Jug Street and Harrison Road in New Albany for $16 million in September 2022. That location also happens to be the site of a data center project listed on data center developer DBT DATA’s website. And earlier this year, Amazon bought another 392 acres in New Albany for $116.7 million, though it hasn’t said what it plans to do with that land.
Data center draws around the world
So, what would draw a data center builder to New Albany or one of the other emerging markets named?
“When you look at up-and-coming markets, there is almost always a confluence of three factors: available/affordable real estate, available/affordable power and rich connectivity options,” Cardenas explained. “When these things come together, they typically attract a hyperscaler to the area, who then develops an ecosystem, which in turn attracts other data center operators to the market.”
Looking abroad, Cardenas noted that the poor state of transmission infrastructure and power costs in prominent European cities like London and Amsterdam is pushing data center builders to look elsewhere. More specifically they’re looking at the Nordics – a region comprised of Denmark, Finland, Iceland, Norway and Sweden.
“In these markets, data center operators can often negotiate low-cost, long-term energy contracts, which make them an attractive venue for expansion,” Cardenas said.
In Asia, Cardenas said Singapore has “reached capacity in terms of both space and power,” presenting an opportunity for neighboring countries to step up as data center hosts. He pointed to Indonesia, Thailand and Malaysia as examples.
Indeed, Google Cloud has disclosed plans to build new cloud regions in Norway, Sweden, Malaysia and Thailand. AWS, meanwhile, is also planning to add new regions in Thailand and Malaysia. And Microsoft is targeting new data centers in Denmark, Finland, Indonesia, Malaysia and Taiwan.
India also appears poised for data center growth. Rajiv Ranjan, associate research director at IDC, told Silverlinings that the public cloud services market is expected to grow by around 17% to 20% year over year in the first half of 2023 to reach around $3 billion. And Statista predicted data center spending in the country will grow from $7.47 billion in 2022 to $9.27 billion in 2027.
AWS launched its second cloud region in India in November 2022, with a new location in Hyderabad. Microsoft, which already has three data center regions in India, is also building out a new location in Hyderabad.
Google Cloud already has data center regions in Delhi and Mumbai. In an interview with Indian news outlet Business Today, Google Cloud identified India as one of the fastest growing cloud marketplaces in the world, which could indicate more data centers there are yet to come.