Beyond Silicon Valley: Identifying the Next Wave of Data Center Hubs
The digital world is built on a physical foundation of servers, cables, and cooling systems housed within massive data centers. For years, the industry has been dominated by a handful of primary markets—Northern Virginia, Silicon Valley, Dallas, and Chicago in the US, alongside European powerhouses like London and Amsterdam. But a perfect storm of technological advancement and market saturation is redrawing the map. The era of predictable growth in established zones is giving way to a new, dynamic landscape of emerging wholesale colocation hubs.
Understanding this shift is no longer just an industry-insider topic; it’s a critical strategic consideration for any business reliant on digital infrastructure. The decisions made today about where to house data will impact performance, cost, and scalability for the next decade.
The Forces Reshaping the Data Center Landscape
The insatiable demand for data processing and storage is the primary engine of growth, but specific trends are forcing the industry to look beyond traditional markets.
- The Artificial Intelligence Revolution: AI and machine learning workloads require unprecedented levels of power and cooling. A single AI server rack can consume 50-100 kW of power, compared to just 5-10 kW for a standard rack. This exponential increase in power density is overwhelming the electrical grids in many established hubs.
- Hyperscale Cloud Expansion: Major cloud providers continue to grow at a staggering rate, seeking vast tracts of land with access to massive power substations. They are increasingly looking to secondary markets to build new availability zones, avoiding the high costs and limited inventory of primary locations.
- Power and Land Scarcity: In markets like Northern Virginia’s “Data Center Alley,” both land and, more critically, electrical power are becoming scarce and expensive. Utilities are struggling to keep pace with demand, leading to long delays and uncertainty for new developments.
- The Drive for Sustainability: Companies are now under immense pressure to power their operations with renewable energy. New data center hubs are often chosen based on their proximity to abundant and affordable green energy sources, such as solar, wind, or hydropower.
The Blueprint for a Future Wholesale Colocation Hub
What makes a city or region a prime candidate to become the next major data center hotspot? The criteria are clear, and they extend far beyond simply having available land.
1. Abundant and Affordable Power: This is the most critical factor. The ideal location has a robust and reliable power grid with significant capacity for growth. Furthermore, access to low-cost renewable energy sources is a massive competitive advantage, helping to control long-term operational costs and meet corporate sustainability goals.
2. Robust Fiber Connectivity: A successful hub must be a nexus of long-haul fiber optic networks, offering low-latency connections to major population centers and other data center markets. Diverse network routes are essential to ensure redundancy and resilience, preventing a single fiber cut from causing a catastrophic outage.
3. Favorable Business Environment: This includes the availability of developable land at reasonable prices, as well as a supportive local and state government. Tax incentives, streamlined permitting processes, and a skilled labor force for construction and operations can make or break a region’s appeal.
4. Low Risk of Natural Disasters: Geopolitical stability and a low propensity for natural disasters like earthquakes, hurricanes, and flooding are paramount. Protecting billions of dollars in physical infrastructure and priceless data is a top priority for colocation providers and their tenants.
Markets to Watch: The Emerging Hubs
Based on the blueprint above, several secondary markets are rapidly gaining prominence and are poised for significant growth. While the list is constantly evolving, these regions consistently appear on the radar of major developers and hyperscalers:
- Atlanta, Georgia: A major connectivity crossroads for the Southeast with strong fiber infrastructure and a growing technology sector.
- Phoenix, Arizona: Offers a favorable business climate, low risk of natural disasters, and excellent access to solar power.
- Columbus, Ohio: Benefits from its strategic location, affordable power, and significant state tax incentives that have attracted major cloud providers.
- Salt Lake City, Utah: Features low-cost, reliable power, a cool and dry climate ideal for reducing cooling costs, and a business-friendly environment.
- Portland, Oregon: Taps into abundant and inexpensive hydropower and offers excellent connectivity to Asia-Pacific markets via subsea cables.
Actionable Security and Strategy Tips for Your Infrastructure
As you evaluate current and future colocation options, it’s essential to think strategically about security and long-term viability.
- Future-Proof Your Power Requirements: Don’t just plan for your current needs. Model your potential power consumption with AI workloads in mind. Ask potential providers about their power scalability and their access to renewable energy sources.
- Audit the Physical and Network Security: Beyond standard certifications, assess the physical security measures of a facility. Inquire about the diversity of their fiber entry points and their network carriers to ensure maximum uptime and resilience against attack.
- Evaluate the “Total Cost of Occupancy”: Look beyond the monthly rent. Factor in power costs, local taxes, and the potential costs of network latency for your specific use case. A cheaper location may not be cost-effective if it compromises performance.
- Consider Geopolitical and Climate Risk: Choose a location that is insulated from both political instability and the increasing threat of climate-related events. A stable location is a secure location.
The data center map is being actively redrawn by the demands of next-generation technology. By understanding the forces driving this change and the key attributes of emerging hubs, businesses can make smarter, more resilient infrastructure decisions that will power their growth for years to come.
Source: https://www.datacenters.com/news/beyond-ashburn-where-are-the-next-wholesale-colocation-clusters
