Digital Realty Building New Santa Clara Data Center

The biggest player in the Silicon Valley data center market is about to get bigger. Digital Realty will build a new data center adjacent to its cluster of facilities in Santa Clara, the company announced this morning.

The company will invest $75 million to  build a six-megawatt data center at 3205 Alfred Street in Santa Clara, which is scheduled for delivery in the first quarter of 2018. The new inventory arrives as Silicon Valley is facing a shortage of data center space, with a limited number of large footprints for hyperscale providers.

Digital Realty’s Silicon Valley portfolio spans 17 properties, more than 2 million square feet of space and 99 megawatts of IT load, all in close proximity to three Silicon Valley Power sub-stations. The company’s Santa Clara facilities are almost fully leased, prompting the need for additional inventory. The new Alfred Street location is near the heart of that cluster of facilities, which is anchored by one of the Valley’s major connectivity hubs at 1100 Space Park Drive.

“We’re looking at a lot of requirements to support SaaS (software as a service) and cloud requirements,” said Chris Sharp, Chief Technology Officer at Digital Realty, who said the site will also support high-density workloads, which have been proliferating as companies roll out more hardware to support artificial intelligence (AI) projects. “Many of these AI deployments have interconnection requirements and need to be close to larger data lakes.”

Digital Realty addresses that need with its Connected Campus concept, which uses fiber to connect distributed data center capacity to connectivity hubs in major markets. That includes Santa Clara, where nearly a dozen Digital Realty data centers reside in the neighborhood around Space Park Drive.

Strong Demand Pipeline in Silicon Valley

Santa Clara has long been the Data Center Capital of Silicon Valley due to competitive power pricing from the municipal utility, Silicon Valley Power, whose rates are significantly lower than the cost of power from PG&E in surrounding towns. That’s why there’s 34 data centers located in a three-and-a-half square mile area within Santa Clara.

“We’ve always seen this as a critical market, with vibrant demand,” Sharp said.

But development sites have grown scarce in Santa Clara, prompting data center developers to seek sites with existing buildings that can be demolished to make way for data center campuses. Vantage Data Centers, CoreSite and Digital Realty have all expanded by acquiring sites with existing structures and knocking them down to make way for server space. Meanwhile, both CoreSite and Vantage are building four-story data centers to get the most capacity possible out of their existing real estate.

That’s one reason why Microsoft has just bought land for a major campus in San Jose. Sharp said Digital is also scouting for properties to provide future growth for its Silicon Valley customers.

“The overall demand in this market has been phenomenal,” he said. “There’s also a lot of complexity operating in a land-constrained market. We have a team dedicated to exploring our options. We would love to stay in Santa Clara, but we have to look at other locations as well.”