The Portland data center market is becoming a strategic location for data center users on the West Coast, particularly among large users or those with international connectivity needs. Although smaller than other West Coast markets like Northern California or Seattle, user interest and current data center development is growing the Portland market.

Low-cost Wholesale Market

Portland is one of the most inexpensive markets for wholesale data center deployments on the West Coast. The city produces low cost hydroelectric power and offers no sales tax, benefitting companies with large infrastructure requirements.

Land is also cheaper and available in larger parcels, particularly compared to other West Coast markets. Most land sales are less than $250,000 per acre in Portland whereas site sales in Northern California consistently occur at $3 million or more per acre.

Connectivity Benefits

Portland is a city with robust connectivity infrastructure. Due to investments from leading fiber carriers, including Zayo, CenturyLink, XO Communcations, and many others, Portland offers an extensive metro footprint. It also has multiple long-haul lines running from San Diego to Canada and eastward to the rest of the US.

Furthermore, Portland benefits from several submarine cable routes, acting as a connectivity gateway to Australia, New Zealand, Japan, China, and South Korea. The most recent development is the Hawaiki Submarine Cable, connecting Portland, Hawaii, and Australia. The project was heavily backed by Amazon.

Growth and Demand in Portland

Portland witnessed an increase in demand in the last two years. Traditionally, Portland absorbs 1 MW or less per quarter. The Portland market recorded over 17 MW of absorption in 2019Click to get more exclusive data and analysis, which was its strongest demand year ever.

Higher demand is leading to an increase in data center development, as well. From 3Q 2019 - 1Q 2020, Portland’s commissioned power increased by 50%. Commissioned power is the metric we use at datacenterHawk to illustrate how much power has been delivered to the market. A similar increase in under construction and planned power occurred in that timeframe. A combination of expansions from existing providers and providers new to Portland are responsible for the new capacity. These providers are also buying large sites where they plan to build multi-building campuses.

Despite the growth in commissioned power, Portland’s vacancy rate dropped to its current 9%Click to get more exclusive data and analysis. This is primarily due to pre-leasing, as most new capacity comes online already occupied and drives down the market’s vacancy rate.

Notable Provider Activity in Portland

Flexential

Flexential currently operates two data centers in Portland and recently announced their plans to move forward with construction on their third facility. The company acquired land for the data center in 2Q 2019 and will construct a 36 MW data center on the site. The 300,000 SF facility is in close proximity to Flexential’s two existing data centers in Hillsboro and will be the largest facility in their portfolio, indicating the company’s confidence in future market demand.

Digital Realty

Digital Realty is developing a large campus on a 47 acre site in Hillsboro. The campus is Digital Realty’s largest in the region and is designed to capture hyperscale demand. Digital Realty will construct two buildings on the site with each offering 48 MW of commissioned power.

QTS

QTS recently opened the first phase of their 158,000 SF building in Hillsboro during 2Q 2020. The 24 MW facility will hold up to 85,000 SF of data center space, and is the first location for QTS in the Portland data center market. The site is master planned for up to 108 MW of commissioned power.

NTT Global Data Centers

NTT Global Data Centers is under construction with 6 MW and 23,000 SF of data center space on their 47-acre site in Hillsboro. The site is master planned to hold five buildings and up to 144 MW of commissioned power. The first phase is expected to come online in 2020.

Other providers active in Portland

Additional providers are in various stages of development in Portland, including Stack Infrastructure, T5, and EdgeConneX.