Houston data center market displays resiliency, provides opportunity

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Feb. 13, 2018

data center market

Houston data centers showcased incredible strength throughout Hurricane Harvey and the ensuing disaster. All facilities in the area weathered the storm as designed, with no direct impact.

Since then, Houston’s healthcare sector has given a lift to the market, resulting in modest positive absorption at year-end. Nonetheless, speculative development has stalled as providers pause to wait for more reliable signs of recovery from the stagnant oil and gas industry. Currently, just 2 MW of data center space is under construction in Houston.

Demand in Houston has diversified slightly to include the healthcare, telecom and technology services industries. Despite small signs of recovery, the oil and gas industry had nonexistent data center demand in 2017. Healthcare on the other hand has increasingly outsourced data center footprints to wholesale colocation and cloud providers.

Overall, Houston’s data center market remains highly user-favorable, evidenced by the fact many top providers have readily available turn-key inventory in the market.

Opportunities for users:

  • Historically low rental rates
  • Revenue and capacity portability becoming an offering
  • More flexibility available in contracts as enticement to rent

Advice for providers:

  • Offsetting migration costs is a key incentive for many users.
  • Your successful operational response during Hurricane Harvey should be highlighted.

Data centers charge ahead globally

Closing out a strong 2017, the global data center market is poised to continue surging for the foreseeable future. This year, continued cloud leasing and growing interest from international occupiers will be among the key drivers for the data center market.

Download our Year-End Global Data Center Outlook, for more on top trends to watch in data centers.

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