Cloud services have become a strategic determinant of interest in new markets by tenants as well as developers and investors. The presence of major cloud services act as an assurance of scalability for future demand as well as a validation of the fundamentals of the market. Of the 63 markets profiled in this report, 34 now offer some form of presence from all three major US cloud services, with considerable further expansion planned and land already acquired in several locations.
Larger capacity markets enjoy well-established inroads with local governments and utilities as to the planning, approval, construction and provisioning of power for new data center developments. This metric enables a gauge of one component of the relative risk profile of a market, with larger markets representing less risk while smaller, more emergent markets generally represent higher risk. Greater market sizes also ensure that on-site staff, sales teams and other supporting human capital are in place to support future developments. The largest markets are thus positioned for continued growth, at least until there is capacity strain on the local power grid or political imperatives change.
A key component to operating expenses for a data center are local power costs. Depending on available energy sources, infrastructure and government policies, the cost of power can vary widely between markets. As increasingly larger deployments become common, the cost of power and its availability are a critical factor for data center developers. Over the past year, this has become an area of much discussion for feasibility analyses as energy prices have risen substantially across many markets. Inflation, supply chain issues and geopolitical crises have all contributed to higher power costs for the end consumer. While power cost does not encompass all the issues of power availability that arose in 2022, it does provide a useful indicator for market comparison.
Regional Highlights
AMERICAS
In 2022, established core markets in North America began to feel the growing pressures of limited power and land. Northern Virginia, the largest data center market in the world, encountered an unprecedented multi-year pause on development in certain submarkets, as utility companies work to address a massive development pipeline. As a result of this, there has been growing interest in secondary markets such as Portland, Phoenix, Columbus, Canadian markets among many others as operators seek larger sites with affordable power. There is still plenty of momentum in more established markets, such as Northern Virginia, Silicon Valley, Chicago, Dallas and Atlanta, as eyes are turning toward untapped submarkets where land and power may be more available.
| 01/ Northern Virginia* | 06/ Dallas |
| Portland* | 07/ Phoenix |
| 03/ Atlanta* | 08/ Seattle |
| Chicago* | 09/ Toronto |
| San Francisco Bay Area* | 10/ Montreal |
*Ranking tie
APAC
The top markets in the region continued to experience growth in 2022 despite headwinds originating from lack of available land sites, power availability and regulatory frameworks in certain locales. The top market, Singapore, lifted its moratorium and established new policies and parameters that have reopened this key market to savvy developers who can satisfy the government’s new requirements. Another critical trend has been the increasing interest in smaller, emergent data center markets across APAC. These include Bangkok, Johor, Hyderabad, Ho Chi Minh and Manila – all of which have been added to our selected markets list for 2023.
| 01/ Singapore | 06/ Beijing |
| 02/ Hong Kong | 07/ Mumbai |
| 03/ Sydney* | 08/ Shanghai |
| Seoul* | 09/ Melbourne |
| 05/ Tokyo | 10/ Kuala Lumpur |
*Ranking tie
EMEA
While development headwinds continue in certain FLAP-D markets, all of these markets continue to place at the top for the region. Growth in secondary markets has been one of the hallmarks of the past year, with increasing interest in markets such as Madrid, Milan, Zurich, Berlin, Warsaw, Oslo, Norway and Barcelona. The extent of political headwinds in markets such as Amsterdam, Frankfurt and Dublin also became clearer as official regulations were established, aiming to reduce pressure on local power grids and land, while simultaneously incentivizing sustainable development. Opportunities remain for discerning investors in both large and small markets, with overall development activity in the region continuing to grow.
| 01/ Amsterdam | 06/ London |
| 02/ Paris | 07/ Frankfurt |
| 03/ Zurich | 08/ Stockholm* |
| 04/ Madrid* | Oslo* |
| Dublin* | 10/ Berlin |
*Ranking tie
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