Released this Spring, the fifth-annual Global Data Center Market Comparison Ranking from commercial real estate services firm Cushman & Wakefield (NYSE: CWK) discerns "incredible growth for the industry across all global regions" in both emerging and established markets.
Notwitstanding the existence of "macro challenges," the study illustrates how that the data center market grew to new heights in 2023, with over 30 GW encompassed in the report.
“Despite commercial real estate and the overall economy facing mounting challenges, data centers have remained in strong growth mode as robust cloud demand and the initial surge of interest in AI deployments maintained confidence in the sector,” observed Jacob Albers, Head of Alternatives Insights – Global Think Tank at Cushman & Wakefield.
The firm noted that this year's edition of the report includes more complete coverage of both colocation and hyperscale self-build inventory over last year’s study.
Albers continued, “The sector still encountered its share of challenges, however, with the availability of power constricted in many major markets. As a result, data center operators have increasingly turned to either venturing into further outlying submarkets outside traditional data center clusters or expanding into secondary and tertiary markets around the world. Markets that only a few years ago were not present in any industry discussions have risen to the forefront and are seeing hundreds of megawatts (MW) in their pipelines.”
The Top 10 Most Established Data Center Markets
According to Cushman & Wakefield's ranking, the world's top 10 most established data center markets include:
1. Virginia
2. Atlanta
3. Tokyo
4. Dallas
5. London
6. Phoenix
7. Mumbai
8. Oregon
9. Sydney
10. North/South Carolina
Across the Americas, the analysis notes how Atlanta, Dallas, Phoenix and Oregon (composing both Portland and Eastern Oregon) remained in the top ten most established data center markets, while shuffling their exact positioning.
“The six largest American markets: Virginia, Dallas, Chicago, Phoenix, Silicon Valley and Atlanta, have all seen their pipelines reach record levels,” said Bo Bond, Executive Managing Director, Cushman & Wakefield. "Phoenix, Dallas and Atlanta, in particular, have seen dramatic growth as access to available power in priority zones of the cloud providers continues to fuel expansion."
The firm emphasizes how its newly defined "Virginia mega-market" (previously referred to as Northern Virginia) remains at the top of the ranking, boasting improved available power infrastructure and land options across further outlying submarkets.
Meanwhile, the North/South Carolina market joined the ranks of the "most established," as the market’s location, land and power options for data centers boosted its place in the analysis.
While not located in CWK's Global Top Ten List, Chicago and the San Francisco Bay Area remained in its Americas Regional Top Ten ranking, coming in at #7 and #10 due to quickly rising power costs and limited land availability.
Despite challenges with power availability, Cushman & Wakefield sees the larger data center markets as having maintained momentum with their pipelines, through growing to outlying submarkets.
Top 10 Emerging Data Center Markets
The report states definitively that last year, power became the industry's paramount concern, with the increasingly limited availability of large blocks of power across major markets.
The study notes that such power limitations have pushed data center operators to even more carefully evaluate untapped and smaller markets worldwide.
CWK's ranking of the top ten global emerging data center markets includes:
1. Kansas City
2. Milan
3. Nashville
4. Osaka
5. Iowa
6. Zurich
7. Minneapolis
8. Hyderabad
9. Austin
10. Bangkok
For emerging markets, the report notes how Kansas City, Nashville, Iowa, Minneapolis and Austin have all been on the rise in terms of hyperscale development, due to their significant available acreage and being connected to either largely untapped power grids or renewable energy development.
Power Limitations Challenge EMEA, as Digital Infrastructure Ramps
Meanwhile, the analysis finds that in EMEA, the traditional powerhouses of Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D) continue to be challenged by the usual confluence of constraints, but remain in very high demand. “Unceasing hyperscale demand is putting severe pressure on the FLAP-D markets which nonetheless continue to grow despite limitations on available power, planning and land,” remarked Andrew Fray, Head of EMEA Data Centers for Cushman & Wakefield.
While London, as the largest European market, steadily remains ranked on the firm's Global Top Ten List at number five, CWK notes that host of emerging markets are growing in the region. The firm sees interest in Southern Europe spurred by intercontinental subsea connectivity, and heightened interest the Nordic metros (including Stockholm, Copenhagen, Oslo and more rural locations) as a result of available renewable energy resources being available at scale.
Fray added, "Meanwhile, pipelines in Southern Europe and the Nordics are dramatically changing the data center landscape, as operators chase powered land at mega-scale for cloud and AI, and a distributed a-zonal topography emerges. The appetite to build data center across the region is substantial with investors drawn towards this attractive asset class."
Meanwhile, the report found that in the Middle East and Africa, Riyadh, Dammam, Abu Dhabi, Doha, Johannesburg and Lagos are attracting direct investment from data center operators, as digital infrastructure grows dramatically to support the digital economy and AI.
Steady Growth for Asia-Pacific Data Center Markets
Finally, in the Asia Pacific region, CWK reports that Mumbai, Tokyo and Jakarta have jumped up the ranking as some of the most rapidly growing markets, with each scoring well in market size, development pipeline and vacancy, among a host of other factors.
The study found that while costs and limited land availabilities have moved both Singapore and Hong Kong off CWK's Global Top Ten Established Markets Ranking, both remain key markets in the Asia Pacific landscape and remain in the ranking's Regional Top Ten at #6 and #10, respectively.
For emerging markets, the firm said Osaka, Hyderabad and Johor have benefited from high competition for sites in their nearby neighbors of Tokyo, Mumbai and Singapore.
“Hyperscale activity has continued to add significant capacity to pipelines across markets like Mumbai, Tokyo, Sydney and Jakarta. As with other regions, we are also seeing growing interest in smaller markets,” noted Vivek Dahiya, Managing Directory & Head, Data Center Advisory Team, Asia Pacific, Cushman & Wakefield. "Emerging markets including Osaka, Hyderabad, Johor and Bangkok in particular are seeing growth. At a country level, Singapore is on track to join mainland China, Japan, Australia and India as markets with over 1 GW in operational capacity in 2024."
The Stage Is Set
Cushman & Wakefield concludes that as AI has proven to substantially grow data center demand worldwide, both site selection strategies and data center designs are being altered.
“With interest in cloud expansion and the deployment of artificial intelligence and machine learning, data center developers have rushed to seize large sites with a clear path to power,” said Ali Greenwood, Executive Director, Cushman & Wakefield.
She added, "2023 finishes as a record year in terms of market growth, tightening vacancy rates and rapid absorption in the data center space. The stage is set for a 2024 full of emerging markets and fresh solutions to the power puzzle.
View Cushman & Wakefield's 2024 Global Data Center Market Comparison
