Dallas’ BBG Sees a Data Center Boom for Years to Come

The rise of cloud technology led to data center facilities setting a new record last year. And in the past few weeks, the COVID-19 pandemic has caused data usage to spike.

Data center facilities in the U.S. were in high demand last year, and according to Dallas-headquartered BBG, that caused the commercial property sector to set a new record. In fact, it’s grown so much, the firm is calling it a data center building boom.

A new report released this week from BBG shows that data center facilities have become one of the fastest-growing commercial real estate property sectors. By 2024, it’s estimated to reach more than $69 billion.

BBG is a local valuation and environmental and property condition assessment services firm. It operates out of 36 offices across the country for more than 2,700 clients. The company says its sole focus is due diligence—it looks at the value, use, and feasibility of real estate assets in a given market.

In its newly released analysis, BBG noted that data center absorption rates—data center space isn’t measured in square footage—in major national markets were up 33 percent from 2018. That equated to the new record of 396.4 megawatts.

The top five markets, in order, were: Northern Virginia (254.6 MW), Silicon Valley (36.5 MW), Phoenix (32.5 MW), Dallas-Fort Worth (25.8 MW), and the New York metropolitan area (16.7 MW). Houston came in at No. 6 and Austin/San Antonio at No. 9, following DFW at No. 4.

The firm largely attributes data center growth to the rise of cloud computing and more people using the Internet for daily tasks. To manage high volumes of data, most companies have decided to move all IT operations to the cloud.

“As the confluence of public, private and hybrid cloud computing strategies drives further expansion of the U.S. data center market, demand for these facilities will continue its upward trajectory as a result of the need to meet expected substantial growth in data usage in the years ahead,” BBG CEO Chris Roach said in a statement.

In fact, data usage has spiked in the past few weeks due to the national coronavirus pandemic. The COVID-19 quarantine caused millions to work from home, and led many metros to issue shelter-in-place orders.

There was some fallback, like construction halts and reduced staffing. But BBG doesn’t anticipate the virus will have a long-term impact on the data center sector as a whole, and says it will continue to flourish.

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