Soaring Demand For Data Centers

With demand for Internet access at an all-time high, data centers are needed now more than ever to maintain connectivity.

By BF Editors
From the January / February 2023 Issue

Due to more work-from-home jobs and companies using a hybrid model, usage of the internet has been soaring. Roughly 55% of office workers globally are now working in a hybrid model, not to mention more social media, online gaming, and video streaming, according to JLL.

The 2022 Global Data Center Outlook study by JLL found that changes in the internet ecosystem will require more power capacities, innovative data storage solutions, and internet connectivity, adding to the ever-growing needs of data creation, mobility, and storage needs.

The report also predicts that supply chain delays will continue to cause delivery challenges for the next 24 months, the enterprise demand for cloud will grow exponentially, sustainability will be a key focus for the sector as net zero carbon mandates multiply, and capital will continue to flow into the sector through private equity and real estate investment. It also mentions that new data center supply will be impeded by the availability of land and power in many major markets, driving expansion outside the traditional hubs.

Data Centers
Meta’s Mesa data center will support 450 megawatts of new, renewable energy projects at three sites in Arizona, ensuring energy for the facility is 100% renewable. (Credit: Arizona Commerce Authority)


CBRE research confirms these trends, showing that supply in data center markets increased by 352.9 MW, or 10.5%, in the first quarter of last year, contributing to a 20% year-over-year increase of 627.3 MW. Average rental rates increased for the first time since 2017, up by 5.9% to $127.50 per kW/month for a 250- to 500-kW requirement, across primary wholesale collocation markets.

The CBRE report also claims that major markets on both the east and west coasts have limited land availability and power capacity for new development. And, alternative markets could see increased demand as a result.

Due to these environmental limitations data center operators are looking for locations that allow them the opportunity to improve water sustainability and use alternative energy resources to solve unique, location-based problems. Operators are looking for ways to use less water to cool the data facilities, to continue seeking energy efficiency gains, and to leverage less water-intensive energy sources like solar and wind.

The world’s largest and most well-known data centers operators, such as Microsoft and Meta, have committed to being water positive by 2030, which includes lowering water use per megawatt of energy used. Google has also taken strides to be water positive by 2030 by replenishing 120% of the water used across all of its offices and data centers.

Arizona Proven To Be A Prime Location For Technology

Arizona’s business climate, affordable energy, and forward-thinking approach to water conservation and management provide an ideal environment for technology companies.

Phoenix is ranked 5th among the top 20 data center markets by sales volume, with a total of $482.3 million in transactions closed from 2012 through 2021, according to 42Floors.

The Phoenix data center market ranked third in the U.S. for leasing activity in the first half of 2022, fueled by demand from hyperscalers preparing for future expansion, according to a new report from CBRE.

The market recorded 46.3 megawatts (MW) of net absorption in the first half of 2022.

Data Centers
Meta’s Mesa Data Center will include five buildings with over 2.5 million square feet of space that will be home to 200 jobs. The campus is expected to be complete in 2026. (Credit: Arizona Commerce Authority)

Here are several examples of recent data center expansions in the state:

NTT Ltd.’s 102-acre data center campus in Mesa will house seven data centers. The Mesa, AZ data center campus will have seven data centers offering a total of 240MW of critical IT load and 1.5 million square feet of space, along with an on-site dedicated substation. The first data center will offer 36MW across six 6MW vaults and 126,000 square feet of data floor space, suitable for deployments of all sizes.

Meanwhile, Meta announced a 960,000-square-foot sustainable data center in Mesa in August 2021. The Mesa data center will support 450 megawatts of new, renewable energy projects at three sites in Arizona, ensuring energy for the facility is 100% renewable.

Meta also announced plans to restore over 200 million gallons of water per year in the Colorado River and Salt River basins to restore more water than the data center will consume. The Mesa data center will use at least 60% less water than the average data center.

Microsoft’s West US 3, a sustainable data center region in Goodyear and El Mirage, will use zero water for cooling for more than half the year when temperatures are below 85 degrees. When temperatures are above 85 degrees, an evaporative cooling system uses less electricity and a fraction of water used by other water-based cooling systems, such as cooling towers.

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In addition, Microsoft is pursuing Leadership in Energy and Environmental Design (LEED) Gold certification and is committed to zero-waste certified operations for this new region, which means a minimum of 90% of waste will be diverted away from landfills through reduction, reuse, and recycling efforts.

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