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Global Data Center Market sees Substantial Growth Despite Macro Challenges

Savannah Durban • 3/27/2024

Cloud demand and growing interest for deployment of AI driving growth in the sector   

CHICAGO, March 27, 2024 – Cushman & Wakefield (NYSE: CWK) released its fifth-annual Global Data Center Market Comparison Ranking, showing incredible growth for the industry across all global regions, and in both emerging and established markets.  

The Virginia mega-market (previously referred to as Northern Virginia) remains at the top of the ranking, with its improved available power infrastructure and land options across further outlying submarkets. 

Top Ten Global Established Markets: 

  1. Virginia 
  2. Atlanta 
  3. Tokyo 
  4. Dallas 
  5. London 
  6. Phoenix 
  7. Mumbai 
  8. Oregon 
  9. Sydney 
  10. North/South Carolina 

Across the Americas, Atlanta, Dallas, Phoenix and Oregon (composing both Portland and Eastern Oregon) remained in the Top Ten Established Markets, while shuffling their exact positioning. The North / South Carolina market joined their ranks, as the market’s location, land and power options boosted its place in the rankings. While not located in the Global Top Ten List, Chicago and the San Francisco Bay Area remained in the Americas Regional Top Ten, ranking as #7 and #10 due to quickly rising power costs and limited land availability. For emerging markets, Kansas City, Nashville, Iowa, Minneapolis and Austin have all been on the rise in terms of hyperscale development—due to their significant available acreage and being connected to either largely untapped power grids or renewable energy development. 

In EMEA, the traditional powerhouses of Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D) continue to be challenged by power, planning and land constraints, but remain in very high demand. London, as the largest European market, steadily remains on the Global Top Ten List at number five. A host of emerging markets are growing in the region, with interest in Southern Europe, spurred by intercontinental subsea connectivity, and the Nordic metros (Stockholm, Copenhagen, Oslo and more rural locations), as a result of available renewable energy resources being available at scale. In the Middle East and Africa, Riyadh, Dammam, Abu Dhabi, Doha, Johannesburg and Lagos are attracting direct investment from data center operators, as digital infrastructure grows dramatically to support the digital economy and AI. 

In the Asia Pacific region, Mumbai, Tokyo and Jakarta have jumped up the rankings as some of the most rapidly growing markets with each of them scoring well in market size, development pipeline and vacancy among a host of other factors. While costs and limited land availabilities have moved both Singapore and Hong Kong off the Global Top Ten Established Markets Ranking, both remain key markets in the Asia Pacific landscape and remain in the Regional Top Ten at #6 and #10, respectively.  For emerging markets, Osaka, Hyderabad and Johor have benefited from high competition for sites in their nearby neighbors of Tokyo, Mumbai and Singapore. 

Top Ten Global Emerging Markets: 

  1. Kansas City 
  2. Milan 
  3. Nashville 
  4. Osaka 
  5. Iowa 
  6. Zurich 
  7. Minneapolis 
  8. Hyderabad 
  9. Austin 
  10. Bangkok 

“Despite commercial real estate and the overall economy facing mounting challenges, data centers have remained in strong growth mode as robust cloud demand and the initial surge of interest in AI deployments maintained confidence in the sector,” said Jacob Albers, Head of Alternatives Insights – Global Think Tank at Cushman & Wakefield. “The sector still encountered its share of challenges, however, with the availability of power constricted in many major markets. As a result, data center operators have increasingly turned to either venturing into further outlying submarkets outside traditional data center clusters or expanding into secondary and tertiary markets around the world. Markets that only a few years ago were not present in any industry discussions have risen to the forefront and are seeing hundreds of megawatts (MW) in their pipelines.” 

“The six largest American markets: Virginia, Dallas, Chicago, Phoenix, Silicon Valley and Atlanta, have all seen their pipelines reach record levels. Phoenix, Dallas and Atlanta, in particular, have seen dramatic growth as access to available power in priority zones of the cloud providers continues to fuel expansion,” said Bo Bond, Executive Managing Director, Cushman & Wakefield.  

“2023 finishes as a record year in terms of market growth, tightening vacancy rates and rapid absorption in the data center space. With interest in cloud expansion and the deployment of artificial intelligence and machine learning, data center developers have rushed to seize large sites with a clear path to power. The stage is set for a 2024 full of emerging markets and fresh solutions to the power puzzle,” said Ali Greenwood, Executive Director, Cushman & Wakefield.  
 
“Unceasing hyperscale demand is putting severe pressure on the FLAP-D markets which nonetheless continue to grow despite limitations on available power, planning and land. Meanwhile, pipelines in Southern Europe and the Nordics are dramatically changing the data centre landscape, as operators chase powered land at mega-scale for cloud and AI, and a distributed a-zonal topography emerges. The appetite to build data centres across the region is substantial with investors drawn towards this attractive asset class,” said Andrew Fray, Head of EMEA Data Centres

“Hyperscale activity has continued to add significant capacity to pipelines across markets like Mumbai, Tokyo, Sydney and Jakarta. As with other regions, we are also seeing growing interest in smaller markets. Emerging markets including Osaka, Hyderabad, Johor and Bangkok in particular are seeing growth. At a country level, Singapore is on track to join mainland China, Japan, Australia and India as markets with over 1GW in operational capacity in 2024,” said Vivek Dahiya, Managing Directory & Head, Data Center Advisory Team, Asia Pacific, Cushman & Wakefield.  

About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.

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