This recap is based on the latest release of Hawk Insight, datacenterHawk’s market research product. With Hawk Insight, you can get the most up-to-date data points on data center construction, leasing, and pricing across 35+ data center markets.

Get a demo of Hawk Insight today to see how it can work for you.

Global data center markets grew at a healthy rate in 2Q 2021. Hyperscale demand continues to shape the landscape in North America, Europe, and Asia Pacific. Enterprise demand is stronger in 2021 when compared to 2020, with an increase in 500 kW-4 MW requirements in the market.

The below article unpacks the high-level activity, trends, and outlook on markets in North America, Europe, and our newly added markets in Asia Pacific.

North American Data Center Markets

North American data center markets grew at a moderate but healthy rate in 2Q 2021.

Commissioned power in the top 18 North American data center markets grew by 142 MW, a notable increase of 2.9% compared to 1Q 2021. Though it didn’t surpass the 6.7% growth swell in 2Q 2020, primarily driven by an abnormally strong period in Northern Virginia, supply and demand levels seem balanced in most markets.

As a note, commissioned power figures below include pre-leasing to best reflect what data center users would be looking at as they seek to meet their requirements.

Commissioned Power in Top North American Markets

Notable Markets

Northern Virginia

Northern Virginia grew at a moderate pace in 2Q 2021, highlighting the continued investment from users valuing the market’s strategic nature. In addition, there are a number of multi-MW requirements evaluating the market, which will have a big impact when completed. Also, several hundred megawatts of planned power was added to the future supply pipeline in 2Q 2021, pointing to the optimism surrounding market growth and the ability to serve it over time.

Portland

In 2Q 2021, Portland saw a significant increase in absorption. Hyperscale and enterprise users continue to view Portland as a viable West Coast option, due to the increasingly competitive colocation market and presence of sub-sea cables connecting to APAC. The Portland market has doubled in size in the last two years and the prospect of similar growth in another short term period for this up-and-coming area looks promising.

Phoenix

In terms of commissioned power growth, Phoenix had one of the strongest periods since 1Q 2021. The market has historically benefited from hyperscale demand, although more enterprise requirements have shown interest in locating here in 2021. Development isn’t likely to slow down either, as the state of Arizona recently extended their data center tax incentives for another ten years to lure more users to the state. Hyperscale users are also building their own facilities in this market, making areas like Mesa and Goodyear interesting for future data center development sites.

Looking Forward

Look for large requirements from hyperscale users to dominate the demand in the North American markets. Enterprise demand is and will be stronger than 2020 as financial, technology, and healthcare companies make up for a slower 2020 and try to complete new projects.

Making data center decisions in a hurry? Be sure to get a demo of the datacenterHawk platform so you can move forward quickly with data to support your decisions.

European Data Center Markets

European data center markets grew at a healthy rate in 2Q 2021.

Commissioned power in the largest data center markets (Frankfurt, London, Amsterdam, Paris, and Dublin) grew by a collective 90 MW in 2Q 2021. This was a healthy increase of 3.9% compared to 1Q 2021 and healthy when compared to growth over the past year of 3.5% per quarter. Again, our commissioned power figures include pre-leasing.

Commissioned Power in Top European Markets

Vacancy rates across these same markets continue to drop as well.

Since 2Q 2020, vacancy rates dropped approximately half a percent on a quarterly basis, starting at 10.3% in 2Q 2020 and arriving at 7.85% in 2Q 2021. In 2Q 2021, vacancy rates dropped by a full percentage point.

Vacancy Rate in Top European Markets

In general, commissioned power is in short supply in several of Europe’s primary markets. Land sites are also being acquired as large data center users look to serve local users and data center providers seek to get ahead of the hyperscale demand curve.

Notable Markets

London

London’s growth was a bright spot in 2Q 2021. New campus developments and large-scale data centers continue to drive London forward as a primary market, even as areas like Slough become saturated and acquiring power for future growth is challenging.

Secondary Markets

While both supply and demand activity in the primary markets in Europe is frenetic, a significant amount of activity is also occurring in smaller markets. In part, this is due to hyperscale companies maturing their presence across the continent. As an example, Milan shows no signs of slowing down as new and established operators ramp up. Madrid also continues to see requirements from large data center users.

Looking forward

The 2Q 2021 European demand was strong and the industry will see similar activity continue throughout the year. It is anticipated providers will shift a portion of their focus to delivering much of the commissioned power they have contracted for this year.

Asia Pacific Data Center Markets

In APAC markets, particularly Singapore and Hong Kong, the moratorium on new development and the shifting political dynamics have created a more controlled pace with new supply deliveries coming to the market.

Across Hong Kong, Singapore, and Sydney, vacancy rates dropped nearly 2.5%, from 10.0% in 1Q 2021 down to 7.5% in 2Q, with Singapore’s vacancy rate moving the needle the furthest.

Vacancy Rate in Top Asia Pacific Markets

When controlled growth is coupled with demand from some of the world’s largest data center users, you’ll see that impact in pricing and vacancy rates (above) as users take what they can get, even at a premium.

Looking Forward

The industry should anticipate the APAC data center market to grow as providers and users shift their focus from primary markets to secondary markets to increase their presence in the region. On the supply side, providers expanding into these secondary markets will most likely be doing so primarily using joint venture agreements or through mergers and acquisitions.

For anyone making decisions in the constantly changing data center market, it’s important to have a clear understanding of the market today. Get a demo of the datacenterHawk platform to see how it can help you uncover new insights, validate your thinking, and accelerate your decision-making with confidence.