CBRE’s Luke Denmon Gives State of the Data Center Industry Keynote: Major Markets Have Seen 41% Growth

Nov 9, 2017
by Josh Anderson

PHOENIX, AZ — At our Southwest Data Center Summit in Phoenix November 2, we welcomed Luke Denmon, Data Center Solutions, CBRE, who provided a morning keynote titled The State of the Data Center Industry, Current Demand Levels and the Evolving Types of Supply, Cloud vs Enterprise. Below is the first part of a transcription of that keynote address.

“I was asked to give you guys the state of the state as it pertains to the Arizona data center market,” he began. “We are in a great position. In a big picture standpoint, broadly looking at the North American data center market, it’s phenomenal. Hyperscale is all the hype right now. We’re seeing a lot of growth from the cloud providers, and we’re also seeing parallel growth as folks are trying to figure out what hybrid infrastructure looks like.”

“So we’re seeing enterprises that held back their data center spend beginning to spend on data center space that is adjacent to their cloud installations,” he continued. “It’s the edge concept. Everyone knows about that, because it’s all we talk about at every one of these conferences. But here’s where it affects the gross data center supply in North America. We tracked a 114 megawatt increase supply over the course of the first half of the year, which brings our aggregate inventory across North America close to 2,000 megawatts. 1892 to be precise.”

“If you extrapolate the markets that CBRE has been tracing since 2013, which includes Northern Virginia, Atlanta, Chicago, Dallas, Silicon Valley and Phoenix, we see that gross supply beginning at 963 megawatts in 2013 and jumping up to 1365 megawatts over four years,” he listed. “So that’s 41.7% growth. Now that doesn’t mean a whole lot. IT’s numbers not on a slide, but if we tie it back to something we’re all familiar with, we can look at the office supply in Metro Phoenix. So today in Metro Phoenix, we’ve got just over 82 million square feet of office supply. That’s everything from Class A to Class B. If we were to see the same level of growth in product supply in the office market in Phoenix as we’ve seen nationally in data center supply, we’d have seen 36 million square feet of office space come online. If we had the same sort of growth, we would need 18 towers go up annually. Some would call that explosive, and candidly, it is.”

“Why is that happening?” he asked. “It’s all because of the users. The modern enterprise is becoming increasingly more digital. Whether you’re a cloud provider or a regular enterprise, you’re developing applications for both your inward facing customers and your outward facing customers to use. All of that is digitally based. Whether you’re housing the data in-house or doing it third part in the cloud, that’s all driving growth.”

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