What drives the demand in the top 10 data center markets? How do IT leaders decide which of the more than 3,000 U.S. data centers is in the best location to house their enterprise’s IT infrastructure? Key factors are proximity to a corporate headquarters and access to their digital ecosystem, but several other considerations – including connectivity options, latency requirements, financial incentives, power cost and availability, environmental risks and the industries within the region – impact the choice.
Did you know that Colombus, Ohio and Portland, Oregon recently moved into the top 10? Read on to learn why each region is where data centers are concentrated, and why one or more of these locations could be the right multi-tenant data center for your organization.
1. Northern Virginia
Image courtesy Virginia Economic Development Partnership.
Boasting more than 550 data centers, Northern Virginia (NOVA) is widely recognized as the data center capital of the world – for good reason. Located near Washington, D.C., the region offers access to the dense and diverse fiber cabling in the nation’s capital. This robust connectivity attracts prominent and rapidly growing enterprises as well as hyperscalers and their customers and partners. To support growing demand for data center services in the area, the region continues to invest in its network connectivity and power supply. For some context, NOVA is five times larger than the next largest market (Dallas) and larger than the six closest markets combined (in terms of number of data centers).
Northern Virginia’s central location allows enterprises along the Eastern Seaboard to share data with low latency. Its proximity to subsea cabling in Virginia Beach and the mid-Atlantic region creates access to global destinations.
A few miles inland, Northern Virginia is typically out of the path of hurricanes, helping ensure a stable operating environment. Also attractive to businesses, Northern Virginia entices enterprises with the lowest commercial electricity rate in the mid-Atlantic region.
2. Dallas
Located between two of the largest data center markets in the U.S. — Northern Virginia and Silicon Valley — Dallas features more than 200 data centers. Its central location, power costs well below the national average and affordable real estate costs vs. other U.S. data center markets are key drivers within the data center marketplace. With both metro and long-haul connectivity as well as a strong economy, Dallas offers a sound, affordable alternative to higher-priced West Coast data centers.
3. Silicon Valley
Lauded as a hub of innovation, Silicon Valley is “home” to industry giants such as Google, IBM, Microsoft, Sony and Amazon. Despite high real estate and power costs, Silicon Valley remains a major data center market, touting approximately 160 facilities.
Demand in Silicon Valley is largely due to its robust connectivity options, including regional cloud availability zones, internet exchange points (IXPs) and high-capacity fiber networking. This robust connectivity establishes Silicon Valley as one of the most interconnected locations in the world and a key interconnection hub for the West Coast.
4. Los Angeles
Like Silicon Valley, the cost of doing business in Los Angeles can chase some enterprises to other markets. However, the city’s large and growing population continues to drive demand for data center services, helping LA maintain its status as a top data center market. With its sophisticated network fabric, abundance of fiber connectivity and the presence of One Wilshire, one of the most interconnected buildings in the U.S. and home to the CoreSite LA1 Data Center. Los Angeles is also a hub for entertainment, manufacturing and international trade.
5. Chicago
A range of benefits positions Chicago as a great market mid-way between the East and West Coasts. The city runs its fiber optic cabling along railroad tracks that connect the coasts. Chicago boasts more than 170 data centers (including CoreSite CH1 and CH2 facilities), is home to one of the largest peering exchanges in the country (Any2Chicago) and serves as a connectivity gateway to the global market.
Chicago offers reliable energy delivery through an almost entirely underground power infrastructure, offering protection from unstable weather conditions and other unanticipated events. In addition to power costs below the national average, Chicago’s cost of living is also significantly lower than metro areas such as New York City and San Francisco. This relative affordability helps attract a highly skilled workforce that lures large enterprises such as Google, Salesforce and Uber. The city also has a low propensity for natural disasters, and the colder climate and proximity to Lake Michigan helps reduce cooling costs while offering a ready and affordable supply of water to support data center cooling systems.
6. Columbus
A new entrant into the top 10 data center markets is Columbus, with more than 150 operational data centers. Because of its low risk of natural disasters, an abundance of affordable land, favorable tax incentives and robust power grid, Columbus is projected to continue its rise in the ranks of top U.S. data center markets.
In 2020, Columbus created the Beta District to foster innovative technologies and businesses that depend on high-speed fiber infrastructure and secure, low-latency connectivity. Columbus’ technological vision brings an array of benefits, while climate stability including a low risk of tornadoes, earthquakes and flooding, as well as a strong power grid and plenty of affordable real estate, make the area a new hot spot for data centers.
7. Phoenix
Offering lower taxes, affordable power and real estate, robust fiber and cable connectivity and minimal exposure to natural disasters, Phoenix is another top data center market in the U.S., with 170+ data centers ready to serve the area. Arizona also offers a reliable power grid with access to renewable energy sources, a plus for organizations committed to sustainability efforts.
8. Atlanta
With the third-largest concentration of Fortune 500 companies in the U.S., Atlanta is one of the fastest-growing data center markets in the country. The city's more than 150 data centers host prosperous technology, health, digital media, transportation and security companies, in addition to industry giants such as Coca-Cola, Delta Airlines, UPS, Georgia-Pacific and Cox Enterprises.
Atlanta’s advantages include competitive energy costs, a robust transportation infrastructure, strong fiber connectivity and a skilled workforce. The New Markets Tax Credits program delivers a business-friendly environment offering an attractive location for both established corporations and startups. The diverse business ecosystem brings industries ranging from fintech and biotech to e-commerce and cybersecurity, fostering a vibrant workplace culture, innovation and collaboration. The metro area is also at low risk for national disasters and offers a highly reputable and reliable power grid that provides businesses with peace of mind around service delivery.
9. New York Tri-State Area
As the global epicenter of the financial services, media and tech industries in the U.S., New York City is a major destination for businesses. While many organizations require a data center presence within the city to achieve ultra-low latency connections, those without such intense demands can leverage any of the 130+ data centers in the surrounding tri-state area of New York, New Jersey and Connecticut. These locations offer geographic proximity to New York City at lower cost and provide greater availability of space for data center expansion. The tri-state area also offers access to transatlantic cabling and fiber connectivity without the high operating costs of the city. The region is also at low risk for natural disasters, further bolstering operational integrity and uptime.
10. Portland, OR
With a combination of low-cost renewable energy, favorable business incentives and low seismic risk, Portland is emerging as a bustling West Coast market for data centers. Portland provides proximity to the busy tech hubs of Silicon Valley and Seattle, but its over 120 data centers ensure higher reliability and are less prone to natural disasters such as earthquakes, hurricanes and wildfires. Due to its use of hydroelectric power, Portland offers some of the lowest energy costs along the West Coast. Portland also offers a range of financial benefits, including energy-related incentives designed to create a favorable business climate.
Know More
Want to see how CoreSite can help you access all these markets? First, check out our latest map of data center campus locations (which includes details on direct cloud onramp availability) and then learn about each market as well as global interconnection options.
When you are ready, contact us to discuss your business and infrastructure objectives, and how CoreSite multi-tenant data centers, Customer Success Team and Solutions Architects can help you reach your goals.
Editor's note: This blog has been updated with new references and new entrants into the top 10 ranking.