Strong demand for cloud-based technology has made U.S. data centers one of the hottest commercial real-estate sectors in 2016, and this trend is expected to show no signs of slowing down this year, according to BBG, a leading national commercial real-estate valuation, advisory and assessment firm.
"The proliferation of data center construction projects around the country is expected to be one of the brightest spots in the CRE sector in 2017 and in the years ahead, as more organizations adopt cloud technology to manage their data usage requirements," said BBG CEO Chris Roach.
Major cloud service providers, such as Facebook, Google, Apple and Microsoft, have been actively snapping up data center space to meet the ever-increasing demand for cloud computing, which is the storing of data over the Internet instead of a computer's hard drive, Roach says.
A growing number of businesses are migrating their IT operations to the cloud in order to keep pace with the heavy volumes of data in today's digital economy.
According to IT analyst firm Gartner, more than $1 trillion in IT spending will be impacted by the shift to cloud technology during the next five years.
In 2016, data center absorption rates hit record levels US, with the top 15 markets reaching 357.5 megawatts, Roach says. Demand for data center space is measured in absorption rates rather than square footage. One megawatt equals 1 million watts.
According to a recent published report on data center activity, continued growth in the data center sector is expected to remain vibrant in 2017 as cloud computing usage heat up. The report said the top four regions for data center activity were Northern Virginia, Northern California, Chicago and Dallas-Fort Worth.
In a number of U.S. cities, there are significant data center construction projects under way or planned for this year, Roach says. But many users are not acquiring data center facilities. Instead, they are using co-location facilities where users share space in the centers in an effort to reduce costs.