The data center market will continue its explosive growth in 2023, creating the inevitable need for expansion.
But where you set up shop matters a lot both for you as a business and your clients. In 2022, data center markets in emerging countries showed robust growth, and the few new players will become the global hotspots for data centers.
The Global Data Center Market Comparison report published by the real estate company Cushman & Wakefield has ranked the data center locations for each economic region for 2023. This listing is based on total power usage in megawatts by the data centers located in the respective regions/cities.
Some places on the list are unsurprising as they are the hubs for major providers and big enterprises. However, emerging locations can also make a new data center an excellent choice. Plus, some of the places offer cost benefits, which can make a significant impact on your overall bottom line.
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Here are the best spots for establishing data centers for each region:
Most of the hot spots for data centers are located in the US.
As per the findings of Cushman & Wakefield, Northern Virginia has emerged as the top data center market in North America. This is partly due to the unavailability of land in hot spots like San Francisco and New York. Even Virginia faced difficulties facilitating data center growth in recent years because of ongoing development.
Nevertheless, it remains a key location on the Eastern Seaboard for data centers that cater to the economic hubs in the northeast, midwest, and southeastern US.
Northern Virginia is primarily made of five counties, including Arlington, Fairfax, Loudoun, Prince William, and Stafford, as well as several independent cities and towns.
Portland is among the secondary data center markets in the US that saw an increase in new facilities. It’s a comparatively less expensive place to set up a data center than neighboring California, whose cities are pressed for land and power.
On the Global Data Center Market Comparison report, Portland shares the top spot with Northern Virginia.
Another popular data center located in the US is Atlanta, Georgia. You wouldn’t think of Atlanta when you think of technology, as San Francisco, Seattle, New York, and even Miami are hubs for startups. However, Atlanta addresses the land issue enterprises face in established locations like California.
Texas is welcoming many enterprises from California that are moving to the Lone Star state for favorable conditions. And you know how they say everything is big in Texas? That’s what data centers want; extensive lands at cheaper costs to set up large hyperscale data centers.
Plus, it’s one of the closest locations to Central and South America. Cities in South America can be quite expensive for data centers. Sao Paulo, the biggest data center market in Southern America by megawatts handled, can be a logistical nightmare when moving equipment.
So Dallas provides a suitable alternative within the US, but somewhat closer to other sub-markets.
Western European cities dominate data center locations in the EMEA region.
Amsterdam remains an excellent location for data centers in 2023, despite soaring power costs and increased regulations for data centers to make the industry more sustainable. It’s a viable option for enterprises seeking to create their data centers through colocation or the cloud.
The Netherlands is an ideal data center location for enterprises interested in locations that are investing in renewable energy. In 2022, the country’s power generation through renewable sources jumped to 20 percent.
Dublin is unquestionably the leading hub of cloud data centers, with companies like Meta setting up their European hub in the Irish capital. Thanks to the high availability of skilled IT workers and favorable economic conditions, the city has become the go-to for cloud providers.
Much like the Netherlands, Ireland is also working to make renewable energy common by 2030 (bringing it to 80 percent of total power).
If Frankfurt is too busy or expensive to establish a data center, your next best choice in Germany is Berlin. Although it’s a smaller market than London or Amsterdam, it’s less saturated and more centrally located.
Berlin’s location is closer to Eastern European countries, especially the newer members of the European Union, like Romania and Bulgaria, that are experiencing growth in their tech sectors.
In the APAC region, the usual choices like Hong Kong and Shanghai remain popular, but new, more affordable locations are popping up to meet the market's needs.
Singapore is again available for establishing data centers after a three-year moratorium. However, it comes with some conditions, as the city-state government has introduced tough regulations for companies aiming to set up a data center.
The gist of the new requirements is that any new data centers need to be green. So establishing a new data center is going to be expensive. However, as the business and IT hub of the Asia-Pacific region, Singapore is still an ideal location for data centers.
Located near Singapore, the Malaysian capital of Kuala Lumpur provides the same location benefits but without stringent regulations. It’s emerging as a favorable data center market and a convenient alternative to Singapore.
It’s witnessing fast development, with big players like AWS, Microsoft, and Alibaba already present.
In India, Mumbai has been the dominant city for large-scale data centers. However, the city of Hyderabad has seen impressive growth in recent years, with enterprises choosing this southern Indian city over densely populated centers like Mumbai and New Dehli.
It can be a cost-effective solution for establishing hyperscale data centers within the world’s most densely populated region.
Whether constructing a data center from scratch or choosing an established one from a provider, you need to consider the benefits or potential pitfalls of the location.
Power cost is a major consideration for enterprises because data centers catering to modern applications like machine learning require tremendous power. Companies that aim to run entirely on renewable energy should opt for locations where green energy is abundantly available.
If the data center aims to serve a particular market, it should be within or near that region. Similarly, connectivity is vital because data centers require reliable connections to different regions.
Furthermore, picking a location less vulnerable to natural disasters and with political stability is crucial.
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