Houston data center market limps along as global demand races ahead

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Sept. 20, 2018

data center market

Global data center markets set a strong tone in the first half of 2018 with steady absorption and leasing volume.

Users’ insatiable need for data center capacity is only expected to increase as a growing number of companies leverage blockchain and other emerging technologies.

Global absorption totaled 421.2 megawatts in the first six months of 2018, a steady increase over past periods. The U.S. and Canada claimed the lion’s share of that absorption with 292.1 megawatts, an increase of 31.9 percent over the first half of 2017.

Meanwhile, Houston’s data center market is struggling to find its stride.

An overall stagnant data center market has left Houston with plenty of available supply for users to choose from. Users in the market can take advantage of competitive rental rates and flexibility with regards to footprint, redundancy and term.

While overall quiet, Houston’s data center market has seen healthcare and retail sectors increase their share of demand.

Healthcare systems are outsourcing their data center needs and today make up 30 percent of user demand for data centers in Houston. This is up considerably from 15 percent in 2017. Demand also increased from the retail and e-commerce sector, up from 5 percent in 2017 to 15 percent in 2018.

Slight increases in demand from new sectors resulted in 2 megawatts of positive net absorption but this pales in comparison to larger data center markets such as Northern Virginia, Phoenix or Dallas-Fort Worth, which recorded 168.3, 19 and 16.5 megawatts of absorption, respectively.

Houston’s data center market will remain user favorable for the foreseeable future, while global activity fuels confidence in the data center sector overall.

For more on data center markets, download our 2018 Global Data Center Outlook.

Read more about our report in the Houston Business Journal and Globe St.