As stories about AI, ML, HPC and the like continue to flood our news and social channels, this will come as a shock to no one: Data center absorption is up. Now, it seems like space and power is snapped up about as soon as it can be deployed thanks to the race to carve out space in the next era of intelligent tech. 

In fact, CBRE’s 2024 Global Data Center Investor Intentions report notes that this rapid uptake is made even more complicated by power distribution constraints and supply chain delays for transformers, circuit breakers and other electrical components. Not to mention, long construction timelines are adding pressure too. Yet, even with constraints, the total North American data center asset sales volume came in at a whopping $4.8 billion in 2023 — a year-over-year increase of 29%. 

So, where is investment leading us? As capacity dwindles in the face of demand that is on pace to handily outstrip supply, how will this change how data centers are provisioned and consumed? 

The Capacity Story To Date

If we asked anyone to name the top data center markets in the U.S., we would probably receive the same answer from almost everyone. Top hits have always included the hallowed ground of Ashburn, VA, as well as Silicon Valley, Dallas, Chicago, New York and New Jersey and other high-volume metropolitan areas. This makes complete sense: Data centers are located based on access to connectivity, power, favorable business environments, large corporations and — of course — proximity to large amounts of end users. This makes applications and data transfer fast, efficient and reliable. 

Of course, this isn’t to say that this long-established highlight reel can’t be disrupted. In reality, the map of strategic data center access is changing all the time due to advancements in national connectivity fabrics, business climates, economic shifts, regulatory adjustments and (a big one these days) changing power availability. 

If we dissect further, we can quickly see how power resources and their availability across the nation can (and will) reshape where data center investment will land — especially when availability is tight and the market for access is competitive. To begin, sustainability and a focus on renewable energy is bringing new markets to the forefront. Locations off the beaten path may provide access to wind or solar power, which are powerful (pun intended) ways to reduce carbon footprints and gain major ESG wins for providers and tenants alike. Meanwhile, power infrastructure upgrades are occurring across the board as incentives for energy efficiency upgrades are being offered by state and local governments. 

Another major motivator here that has continued to grow is edge computing. In an interconnected world like ours, it’s becoming less and less relevant to be directly in the market where masses of people reside. Our interconnection strategies and infrastructure assets are advancing quickly, meaning that applications and data no longer need to be so closely tied to one geography. Moreover, many are finding that being in the middle of the U.S. — previously seen as a no-man’s land due to major metros residing on the coasts — actually delivers holistic latency benefits. In short: It pays now to be moderately close to a huge number of places rather than be extremely close to a smaller regional space. 

Interestingly, here’s how all of that comes together: S&P Global Market Intelligence has reported that in response to power demands and efficiency goals, several regions are becoming hot spots for data center development. In fact, ten new markets are poised to surpass 1GW of demand by 2028

Notably, thanks to investment from hyperscalers like Google and Meta, we were particularly excited to read this snippet: Omaha, Nebraska, currently ranks second in terms of operating data center power demand. (To learn more about how 1623 Farnam and Google are linked, check out this blog.)

For Powerful Results, Choose Wisely

Here’s the upshot: In a market notoriously constrained by power, the interesting turn of events is that new opportunities are opening up across the nation that otherwise would go unnoticed. We are experiencing the death of fly-over data center hubs thanks to new power dynamics (in the literal sense) — the result is that in a way, those looking to find available space and power for new deployments are spoiled for choice. 

Rest assured that as interconnection flourishes thanks to IX innovations, as new markets make themselves amenable to data center investment and as new applications redraw the map of data flows, IT can thrive anywhere. Trust us — we would know!

Looking for capacity in a strategic location with local, regional, national and international connectivity? Fortunately, we’ve just added power to our leading location in Omaha. Reach out today to learn more, or check out our President and CEO’s recent interview to learn more