Most Economical Markets for Leasing Data Centers

With the growing dependency on cloud computing, demand for leased data center space is on the rise, and the costs can vary drastically from market to market, according to “Leasing a Data Center: U.S. Market Cost Comparison,” a new report by CBRE Group.

With the growing dependency on cloud computing, demand for leased data center space is on the rise, and the costs can vary drastically from market to market, according to “Leasing a Data Center: U.S. Market Cost Comparison,” a new report by CBRE Group Inc. However, unlike other sectors of the commercial market, a top-tier market doesn’t necessarily mean a top-tier rental rate.

With cloud computing having gone mainstream, IT and real estate executives are left to make complicated site-selection choices, as noted in the report. “On average more than 60 percent of the cost is attributed to rent, which we find highly competitive in many of the markets with quality product and a balance of supply to support the market demand,” Pat Lynch, managing director, Data Center Solutions, with CBRE, told Commercial Property Executive.

Based on the total project costs of rent, power and taxes, the report concludes that Atlanta, Northern Virginia, Colorado Springs, Portland and Seattle–the first two of which are Tier 1 data center markets–offer the most cost-effective options for leasing data center space. However, you get far less bang for your buck in Boston, Des Moines, Kansas City, Northern Florida and Omaha. Per the report, lease rates per kilowatt in less mature markets, like the aforementioned Midwestern locales, are higher than more established markets like the high-tech haven of Silicon Valley.

In both primary and secondary markets, however, the data center sector is rapidly growing in size. By the second quarter of 2014, the year-over-year increase in data center inventory–measured in megawatts–had skyrocketed 31.3 percent.