The data center industry is facing a shift in timing, as developers are doing what they can to try to keep up with the demand. Providers have a goal to sign leases which is leading to a land rush dynamic, as companies are attempting to lock in space sooner rather than later. This rush is being driven by the need for reliable and consistent power, as well as the rise of cloud services. One example of this can be seen in Northern Virginia. This is a historically reliable market, but with recent power delivery challenges, providers are looking to submarkets around Ashburn and even other major market markets for opportunity.
The industry is also seeing a shift in pricing as providers are raising rates and customers are becoming more selective. This shift is being driven by the increasing costs of operating data centers, which is being passed on to customers. In some markets, prices are increasing by as much as 20%. Due to this high demand, data center lease rates are coming at a premium rate.
Types of development:
One of the major types of development changes occurring in the data center industry is an increase in build-to-suit (BTS) projects. In the past, most data center developments were either owner-occupied or speculative builds that were subsequently leased out. However, BTS projects are becoming more common as companies look for turnkey solutions that meet their specific needs. This shift is being driven by the increasing complexity of data center operations, which has made it more difficult for companies to find space that meets their requirements.
Another change in the data center industry is a shift in focus from domestic to international markets. In the past, most data center development was concentrated in North America. However, this is changing as companies look to expand their operations into new markets. This shift is being driven by the increasing global nature of business, which has made it necessary for companies to have a presence in multiple countries.
The data center industry is also seeing a change in site selection criteria. In the past, most data center development was concentrated in urban areas. However, this is changing as companies look to lower their costs by locating data centers in cheaper, less-developed areas. This shift is being driven by the increasing costs of operating data centers in urban areas, which has made it more expensive for companies to locate their facilities there.
These are five major shifts that are occurring in the data center industry. Each of these changes are driven by a different factor, but they all have one thing in common: they are all making it necessary for companies to adapt their operations to meet the changing demands of the market. As the data center industry continues to evolve, these shifts will continue to shape the way that companies do business.