If you’ve followed along with the HawkPodcast recently, then you know we’ve been talking about hyperscale data centers for a while now. Our goal has been to give you vital insight about hyperscale data centers while also introducing a tool that may be helpful. If you want to dive deeper into any of these topics, click on the headings throughout this article to learn more!
With the different types of data centers, here’s how we can clarify exactly what we’re talking about: A data center is a building that houses an organization's servers and IT equipment. There are private or enterprise data centers that specifically serve as a resource for the businesses that own them, as well as multi-tenant or colocation data centers that serve the public.
When people refer to “hyperscale data centers,” they’re most often referring to the customers who own or lease a given data center, as well as the size. Companies who use hyperscale data centers will either build/lease 20+ MW at a time or will gradually expand to that number over time in 1-3 MW chunks. So a hyperscale data center is one that either is built by a hyperscale company itself, or one that’s designed to meet that company’s needs.
Capturing tomorrow's opportunity starts with a clear understanding of where the largest data center users are today, and this landscape is continually changing. In Q1 of 2022, the data center industry is coming off the most active quarter it’s ever had. Whether or not that trend will continue starts with looking at where hyperscale data centers are located today and how they’re poised for growth tomorrow.
Roughly 40% of hyperscale data centers are in the United States — specifically, Northern Virginia, Northern California, Phoenix, Dallas, and Chicago — where hyperscale development and leasing continues to boom. Right behind the US, China currently hosts 10% of the world’s hyperscale sites, followed closely by Japan, Germany, the UK, Australia, Canada, India, and Singapore.
When looking at companies that are continuing to grow their hyperscale data center presence, Amazon Web Services primarily builds in Northern Virginia (1747MW, 238 Leased), Microsoft primarily leases (26MW built, 235 leased), and Facebook primarily leases in Northern Virginia (242MW, 0 built), but has built in Dallas (150MW), Oregon (226MW), and Des Moines (171MW).
When it comes to leasing wholesale and build-to-suit data center space, hyperscale companies are controlling the demand, making them the primary customer who decides how data centers develop worldwide. In order for colocation providers to capture some of this demand, they need to have a strategy for how to approach land acquisition, development, and a sustainable path to growth.
Developers are already pursuing “land banking” strategies where they acquire land for future projects in markets that currently lack development sites. As developers work to buy land where a decrease in premium sites has led to an increase in price, places like Northern Virginia and Phoenix are experiencing accelerated growth.
While the cost of the lease and the cost of power are both factors, hyperscale companies are emphasizing scalability in terms of what future growth could look like. Instead of only asking how much this capacity will cost today, hyperscale developers must also think about how much it will cost to increase the power usage in the future.
In addition to the steady growth in traditional markets that’s showing no signs of slowing down, hyperscale data centers are starting to pop up in small markets. Google has now built 277MW in Omaha, Amazon has 204MW in Columbus, and Facebook has 156MW in Albuquerque. While building increases in these smaller markets, leasing demand continues to surge in the traditional markets with companies like Apple and Oracle leasing in places like Northern Virginia and Chicago.
For anyone hoping to keep an eye on this growth as well as what it means for the future of hyperscale data centers, we’ve created a tool dedicated to helping you understand and construct your own hyperscale strategy.
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