After a record 2016, wholesale data center leasing by companies with hyper-scale cloud platforms – they lease more data center space than any other type of companies – was down in 2017, according to a new market report by North American Data Centers.
But the amount of construction currently underway by wholesale data center providers paints an expectation that the slowdown will be short-lived. The amount of multi-tenant data center inventory under construction is nearly double what it was 12 months ago, the data center real estate brokers wrote in their annual report.
Most of the leasing activity in 2017 happened in Ashburn, Virginia. The Northern Virginia region as a whole (the world’s largest data center market) is also where the biggest portion of all the new construction is taking place.
Facebook, Microsoft, Apple, Google, and Uber signed the largest turn-key wholesale data center leases last year. Here are the biggest 10:
- Facebook: 22MW in Ashburn with DuPont Fabros Technology (now part of Digital Realty Trust)
- Microsoft: 18MW in San Antonio with CyrusOne
- Apple: 14.5MW in Ashburn with DuPont Fabros
- Apple: 14.5MW in Chicago with DuPont Fabros
- Microsoft: 12MW in Phoenix with CyrusOne
- Google: 10MW in Ashburn with CyrusOne
- Facebook: 6MW (renewal) in Santa Clara with Digital Realty
- Uber: 5MW in Phoenix with Aligned Energy
- Uber: 4.8MW in Ashburn with Digital Realty
- Existing unnamed customer: 4MW in Dallas with Digital Realty
In addition to the four deals on the list, Apple also leased 2MW in Austin with Data Foundry, according to the brokers. Both Apple and Facebook returned to leasing large blocks of data center capacity in 2017 after several years of focusing exclusively on building their own server farms. (Both continue to build their own data centers as well.)
Facebook also is expanding its footprint elsewhere in Virginia. The company announced in October a plan to invest $1 billion in building a data center in Henrico, just outside of Richmond, which includes $750 for the facility and $250 million for solar farms to generate energy to power it.
In addition to the three wholesale data center leases listed on the report, Apple’s capacity ramp-up also includes construction of new data center campuses in Iowa and Denmark.
Alphabet’s Google is another company on the list that’s both leasing and building in Virginia. In addition to the 10MW lease with CyrusOne in Ashburn, the company last year bought two land parcels totaling 148 acres for data center construction outside of the core Ashburn data center cluster.
Uber has now made NADC’s list for two years in a row. Despite all the turmoil the company has been going through in recent years, it continues to expand data center capacity to serve its drivers and customers. The close to 10MW it leased in Phoenix and Ashburn in 2017 followed two 2.6MW leases in Ashburn in 2016.
Once again, Amazon Web Services did not end up on the list, but not for lack of large leases. The company leases powered-shell buildings rather than fully built-out data centers. Therefore, the brokers at NADC don’t include its activity in their reports.
As we reported in November, a developer named Corporate Office Properties Trust is building about half a million square feet of space to house AWS data center muscle in Virginia. The cloud giant’s server farms already occupy 1.9 million square feet of space leased from COPT.
You can read NADC's full report here.