August 22, 2016
By: Ryan Mathews, Marketing Manager, JLL
Tech and communication firms with major cloud storage presence and requirements are driving heavy demand for ‘wholesale’ – or single-user, self contained — data facilities in the Bay Area. With the total size of the global cloud-managed service market expected to double by 2021 the outlook is generally positive for single user facilities.
In fact, the San Francisco Bay Area has the second highest megawatt (MW) demand in the country (after Northern Virginia). At 57.6MW year to date, absorption this year has already outpaced last year.
According to Raul Saavedra, who recently joined JLL after many years in the data center industry, “markets like Santa Clara will remain highly attractive to data center users despite lower cost alternatives like Oregon and Arizona.” Santa Clara is served by Silicon Valley Power, which offers power at roughly 40 percent lower rates than other utilities in California.
With only 200,000SF/18MW of new data center space to be delivered next year, supply has largely mirrored demand and absorption has come mainly from strong credit tenants. Look for available inventory in the wholesale data center market to become tight through next year and although pricing will remain relatively stable in the short term, rental rates will trend upward later this year and into 2017.