• About Us
  • Partnership Opportunities
  • Privacy Policy

Data Center Frontier

Charting the future of data centers and cloud computing.

  • Cloud
    • Hyperscale
  • Colo
    • Site Selection
    • Interconnection
  • Energy
    • Sustainability
  • Cooling
  • Technology
    • Internet of Things
    • AI & Machine Learning
    • Edge Computing
    • Virtual Reality
    • Autonomous Cars
    • 5G Wireless
    • Satellites
  • Design
    • Servers
    • Storage
    • Network
  • Voices
  • Podcast
  • White Papers
  • Resources
    • COVID-19
    • Events
    • Newsletter
    • Companies
    • Data Center 101
  • Jobs
You are here: Home / Colo / Demand Remains Strong in Silicon Valley Data Center Market

Demand Remains Strong in Silicon Valley Data Center Market

By Rich Miller - March 27, 2018 Leave a Comment

Demand Remains Strong in Silicon Valley Data Center Market

The lights of Silicon Valley at night, seen from Mount Hamilton. (Photo: Rich Miller)

LinkedinTwitterFacebookSubscribe
Mail

We continue our series of stories on the leading geographic markets for data center space with a report on the Silicon Valley Data Center Market. Data Center Frontier is partnering with DatacenterHawk to provide in-depth market reports on each city we profile.  This post focuses on demand trends in the Silicon Valley data center market.

silicon valley data center market demand

Download the full report.

Silicon Valley is the second-largest market for commissioned data center space in the U.S., trailing only Northern Virginia. Requirements typically originate from companies already located in the region, often representing the primary West Coast footprint for larger web infrastructures. In many cases, companies see data center space in Silicon Valley as a strategic imperative that outweighs other factors, similar to the attraction of Manhattan or downtown Chicago.

In theory, companies objectively evaluating the market for expansion should be deterred by the area’s expensive real estate, power costs and risk of earthquakes. In reality, Silicon Valley has seen consistent activity from large data center users and colocation/cloud operators over the last five years. Companies seeking space in Silicon Valley have clearly found a comfort level with the cost environment and earthquake risk (which nonetheless is a common emphasis of data center providers in rival markets like Phoenix, Las Vegas, Reno and Sacramento).

Providers in Silicon Valley compete with several other markets. Hyperscale companies often weigh options in both Santa Clara and the Pacific Northwest, which offers cheaper land and power and a favorable climate for using outside air for cooling. It’s important to note that several cloud providers deploy capacity in both regions. Companies that are risk-sensitive may weigh options in Silicon Valley alongside providers in Phoenix or Las Vegas, which offer low disaster risk; or Sacramento, which offers a combination of lower earthquake risk and short driving time. Here’s a look at the trends in the Silicon Valley/ Northern California market, measured in square feet of space:

Trends in Silicon Valley Data Center Market Demand

Silicon Valley is a market of markets, with strong activity in both retail colocation and wholesale data center space. Tenants use data center space for a variety of purposes, including corporate IT, research labs and high-performance computing, as well as cloud deployments.

Silicon Valley data center market demand for space remains strong, but the availability of space remains limited. Much of the 24 megawatts of available space is found in small pockets spread across retail colocation footprints, especially facilities operated by Equinix and Cyxtera. There is a much more limited supply of wholesale footprints that offer more than 1 to 2 MWs of contiguous data center space.

This will likely impact the deal dynamics in 2018, which will bring even greater focus on the relationships between cloud buyers and data center service providers. In recent years, the Santa Clara market has seen significant pre-leasing, with customers reserving space while a facility is still under construction. With a limited number of large wholesale footprints available, new space may generate leasing interest before it even opens for business.

The price of power plays an outsized role in data center economics, creating an incentive to locate space in Santa Clara. But procuring a site and building space in Santa Clara takes time, which is an increasingly important factor for cloud players, who seek to deploy capacity in 6 to 9 months in other markets.

silicon valley data center market demand

Silicon Valley data center market demand for space remains strong, but the availability of space remains limited. (Photo: An Infomart Silicon Valley data hall; source: Infomart)

What’s clear is that Silicon Valley remains an important destination for hyperscale cloud providers. Amazon, Microsoft and Apple may be building their own data centers in the Pacific Northwest, but they continue leasing wholesale space in Santa Clara.

High-Density Workloads on the Rise

What are the new demand drivers? Growing adoption of artificial intelligence is driving more demand for high-density computing. Several recent developments highlight this demand:

  • Vantage recently signed a customer requiring 30 kWs of power per cabinet in its new V6 data center in Santa Clara, which will bring water directly to the rack. The deal was one of three leases at V6 that filled 90 percent of its 9 megawatts of capacity in about three months.
  • A customer with a high-density requirement pre-leased 2 megawatts of space at Colovore, a Santa Clara provider specializing in highdensity computing.
  • CoreSite added additional power infrastructure at one of its Santa Clara data centers to provide additional capacity for an enterprise customer that was expanding its power usage by boosting the density within its existing data hall, rather than leasing additional space.

These high-density workloads are driven by the growing use of GPUs and FPGAs, which use more power than traditional CPUs, and are becoming common in AI computing infrastructures. The ability to support these rising densities will be an important factor in data center design going forward, especially in Silicon Valley.

Many retail colo customers, including content companies and social media providers, seek interconnections and network-rich data center ecosystems. Equinix is the leading player in this niche, and operates seven data centers in Silicon Valley, including a large data center campus in South San Jose. Digital Realty’s Telx unit also offers interconnection services from multiple facilities in the region.

The high cost of Silicon Valley real estate has recently been creating demand for data center space. Many companies are seeking to move server rooms and technology labs out of their headquarters, as the recent hiring boom has led to a shortage of office space on corporate campuses.

This has created several types of opportunities for data centers providers. Vantage has done multi-MW deals with several lab tenants for “variable resiliency” space, which support high-density workloads with a non-redundant (N) power configuration.

This Data Center Frontier Special Report series also explored the shortage of finished data center space in the Silicon Valley data center market. Next week, we will cover trends in supply, as well as the history of supply cycles in the region.

For full details on the Silicon Valley data center market, we invite you to download the Data Center Frontier Special Report: The Silicon Valley Data Center Market. 

LinkedinTwitterFacebookSubscribe
Mail

Tagged With: Data Center Markets, Silicon Valley, Silicon Valley Data Center Market report, Vantage Data Centers

Newsletters

Stay informed: Get our weekly updates!

Are you a new reader? Follow Data Center Frontier on Twitter or Facebook.

About Rich Miller

I write about the places where the Internet lives, telling the story of data centers and the people who build them. I founded Data Center Knowledge, the data center industry's leading news site. Now I'm exploring the future of cloud computing at Data Center Frontier.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • Twitter

Voices of the Industry

EOL & EOSL and Long-Term Hardware Infrastructure Strategy

EOL & EOSL and Long-Term Hardware Infrastructure Strategy With close to 25 years of data center and IT expertise, Chad Peters of Service Express shares insights regarding the equipment life cycle and how IT leaders can better prepare their budget, strategy and future projects.

DCF Spotlight

The COVID-19 Crisis and the Data Center Industry

The COVID-19 pandemic presents strategic challenges for the data center and cloud computing sectors. Data Center Frontier provides a one-stop resource for the latest news and analysis for decision-makers navigating this complex new landscape.

An aerial view of major facilities in Data Center Alley in Ashburn, Virginia. (Image: Loudoun County)

Northern Virginia Data Center Market: The Focal Point for Cloud Growth

The Northern Virginia data center market is seeing a surge in supply and an even bigger surge in demand. Data Center Frontier explores trends, stats and future expectations for the No. 1 data center market in the country.

See More Spotlight Features

White Papers

Lithium-Ion Batteries

The Advantages of Using Lithium-Ion Batteries as A Backup Power Source in Single-Phase UPS Applications for Data Centers

If your company has a need to establish localized IT resources, you may be thinking of investing in and deploying multiple IT footprints in remote locations, as part of a distributed computing or edge network. In the past five years, lithium-ion batteries have come into use as a stored energy source in traditional data centers. Download the new white paper in which Vertiv looks at how these types of batteries can also be used to support single-phase UPS systems in remote mission-critical environments and edge data centers.

Get this PDF emailed to you.

We always respect your privacy and we never sell or rent our list to third parties. By downloading this White Paper you are agreeing to our terms of service. You can opt out at any time.

Newsletters

Get the Latest News from Data Center Frontier

Job Listings

RSS Job Openings | Peter Kazella and Associates, Inc

  • Generator Sales Associate - New York, NY
  • Mechanical Engineer - Shorewood, WI
  • UPS Field Service Technician - Boston, MA
  • Data Center Facility Engineer - Chicago, IL
  • Data Center Facility Engineer - Naperville, IL

See More Jobs

Data Center 101

Data Center 101: Mastering the Basics of the Data Center Industry

Data Center 101: Mastering the Basics of the Data Center Industry

Data Center Frontier, in partnership with Open Spectrum, brings our readers a series that provides an introductory guidebook to the ins and outs of the data center and colocation industry. Think power systems, cooling, solutions, data center contracts and more. The Data Center 101 Special Report series is directed to those new to the industry, or those of our readers who need to brush up on the basics.

  • Data Center Power
  • Data Center Cooling
  • Strategies for Data Center Location
  • Data Center Pricing Negotiating
  • Cloud Computing

See More Data center 101 Topics

About Us

Charting the future of data centers and cloud computing. We write about what’s next for the Internet, and the innovations that will take us there. We tell the story of the digital economy through the data center facilities that power cloud computing and the people who build them. Read more ...
  • Facebook
  • LinkedIn
  • Pinterest
  • Twitter

About Our Founder

Data Center Frontier is edited by Rich Miller, the data center industry’s most experienced journalist. For more than 15 years, Rich has profiled the key role played by data centers in the Internet revolution. Meet the DCF team.

TOPICS

  • 5G Wireless
  • Cloud
  • Colo
  • Connected Cars
  • Cooling
  • Cornerstone
  • Coronavirus
  • Design
  • Edge Computing
  • Energy
  • Executive Roundtable
  • Featured
  • Finance
  • Hyperscale
  • Interconnection
  • Internet of Things
  • Machine Learning
  • Network
  • Podcast
  • Servers
  • Site Selection
  • Social Business
  • Special Reports
  • Storage
  • Sustainability
  • Videos
  • Virtual Reality
  • Voices of the Industry
  • White Paper

Copyright Data Center Frontier LLC © 2021