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The Top Data Center Markets in the US for 2024
The data center market continues to grow at an unparalleled pace. Global data center capacity grew from 4.9 Gigawatts to 7.4 Gigawatts, or 51%, between 2022 and 2023, according to Cushman & Wakefield. Hyperscale data centers, AI, and a move to edge data centers in secondary and emerging markets drive growth. Top data center markets in the US are riding this wave, presenting challenges and opportunities for customers looking for colocation services.
As a global colocation broker, Brightlio is in tune with developments in markets across the United States. If you are exploring colocation services, we hope this guide will help you choose the best market for your business needs. Join us as we explore the top data center markets in the US for 2024. Let’s get started!
1. Northern Virginia
Northern Virginia is the only choice if you are looking for colocation services in the largest data center market on earth. The region is known as “Data Center Alley” and has long reigned as the king of data center markets in the US. With almost 2.6 Gigawatts of capacity, the region represents almost 35% of global data center capacity.
Its unrivaled connectivity to major metropolitan areas and government agencies, robust power grid, and low-latency access to undersea cables make it an ideal hub for colocation. Northern Virginia is also home to all seven major public cloud providers. The region’s strategic location near Washington, D.C., positions it as a prime choice for businesses seeking secure data storage and processing capabilities.
Although data center supply increased almost 20% from 2022 to 2023, vacancies remained near historic lows at 1.8%. This means that pricing in the region tends to be high. That said, Brightlio has several partners with affordable colocation options in the region. Even partial rack colocation options can be found.
2. Dallas-Fort Worth
The Dallas-Fort Worth area offers an excellent combination of scale and affordability. Cushman & Wakefield lists Dallas as the second largest data center market in the US at 653 Megawatts. The region also offers the second most affordable power of any major global market at less than 6 cents per kilowatt hour. Additionally, Dallas offers a business-friendly environment, affordable land, and reliable power infrastructure. This means that Dallas offers plenty of colocation providers at a reasonable price.
Demand has consistently outstripped supply over the last several years. This has put upward pressure on the cost of data center services. Fortunately, five million square feet of data center space is currently under construction in North Texas, which should help meet demand.
Chicago boasts a prime location as the crossroads of America. Its strategic positioning makes it a critical data center market for businesses looking to serve both coasts and the key Canadian market of Toronto. The city’s robust telecommunications infrastructure and access to multiple power sources enhance its appeal for colocation. Chicago’s climate stability and proximity to major transportation routes further solidify its leadership position.
Chicago is also the leader in affordable colocation services. According to CBRE, the city has the lowest data center prices of any major global market. This makes Chicago a great destination for hosting and cloud service providers. However, available space in the market declined in 2023, which is putting upward pressure on pricing.
4. Silicon Valley
Silicon Valley’s significance in the tech world is unmatched, and its demand for data centers continues to grow. The region’s concentration of tech giants and startups demands high-performance data processing capabilities, making it an ideal location for colocation. Access to innovation and a skilled tech workforce further strengthens Silicon Valley’s appeal.
Given the region’s leadership position in tech, demand is high. Land prices have increased rapidly, and vacancy remains near a record low at 2.9%. These factors combine to make Silicon Valley the most expensive market in North America. Silicon Valley is undoubtedly one of the premier markets for colocation services, but you will pay for the advantages of being there.
Phoenix offers more than just its sunny climate. A low risk of natural disasters, abundant renewable energy sources, and a business-friendly environment make it a strategic choice for colocation. Phoenix was the fourth largest data center market in the US, according to Cushman & Wakefield. It also saw the 6th most data center construction in 2023, which should lead to future growth for the industry.
Cloud providers make up the largest industry in the city, accounting for 48% of user demand, according to JLL. Google Cloud and Microsoft Azure have huge projects under construction in the area. Cloud growth is driven by relatively affordable real estate and power, as well as fiber connectivity to the Eastern and Western US.
6. New York/New Jersey
The New York City and New Jersey markets combine to form the sixth largest market in the US. Proximity to the largest global financial market is a key factor driving growth in the 130+ data centers in the region. Additionally, the region is home to many submarine cables to Europe, Latin America, and the Caribbean, offering businesses with the fastest connectivity to these markets.
If ultra-low latency connectivity to financial markets is a requirement, you’ll want colocation in one of Manhattan’s carrier hotels. Better values are to be found in New Jersey, with numerous options in the Secaucus and Newark regions.
Atlanta, with its strategic location in the Southeastern US, continues to grow as a data center market. The city’s business-friendly climate, favorable power costs, and accessibility to major highways make it an appealing destination for colocation. As the Southeast’s economic importance expands, so does Atlanta’s role as a data hub.
Atlanta has long been viewed as a secondary market, but supply constraints in areas like Northern Virginia and Dallas are increasing demand in Atlanta area. Recent announcements of growth in the area include a a $1.3 billion new data center from QTS Data Centers, a 36-megawatt expansion by Flexential, and a 40-megawatt build from Databank. It appears more growth is ahead for the Atlanta colocation market.
Oregon’s Portland/Hillsboro area offers a unique blend of environmental sustainability and data center capabilities, making it one of the most popular secondary markets. Cushman & Wakefield list Portland as the 7th largest data center market in the US. Its temperate climate reduces cooling costs, while access to abundant green energy sources aligns with eco-conscious business practices. Colocation providers in this region cater to those seeking environmental responsibility and reliability.
Technology companies make up 87% of the demand in the region. This is partially driven by proximity to large technology companies in the Pacific Northwest, like Amazon and Microsoft. It is also driven by proximity to subsea cables connecting the region to major international markets, including Japan, Australia, and New Zealand.
9. Los Angeles
Los Angeles stands at the crossroads of entertainment, technology, and international trade. This dynamic city requires robust data infrastructure to support its thriving industries. Colocation providers in LA leverage its strategic location and connectivity to serve various businesses, from Hollywood studios to tech startups.
Los Angeles data centers also feature excellent connectivity to international markets. Subsea cables connect Southern California to Japan, Malaysia, Indonesia, Australia, and New Zealand. This makes Los Angeles an excellent hub for serving international clients. One Wilshire, one of the world’s most important internet exchange points, handles as much as a third of trans-Pacific traffic.
Rising power costs and a limited supply of data centers are barriers to entryd. Digital Realty’s upcoming 13-story data center in downtown Los Angeles will help boost the market. The facility is expected to have about 200,000 square feet of data center space catering to the media and entertainment industry.
10. Salt Lake City
Salt Lake City’s emergence as a data center market is driven by its favorable climate and business-friendly environment. The city’s low earthquake risk, ample renewable energy resources, and affordable land costs make it an attractive destination for colocation providers. Hyperscalers and social media companies are leading the growth engine. The city is now the 10th largest data center market in the US.
Salt Lake City’s affordable land and energy combination has made the city a popular alternative to the largest data center markets. Salt Lake City and Phoenix showed the biggest demand in net absorption, beating out larger markets like Northern Virginia and Silicon Valley.
Brightlio Delivers Colocation Solutions!
If you are in the market for colocation services, Brightlio can help. As a colocation broker, we leverage a global network of provider partners to deliver the best solution for your needs and budget.
Additionally, we offer network connectivity, cloud, unified communications, value-added resale, and advisory services. This makes us a fit for almost all of your technology needs. We are committed to being your most trusted and responsive technology partner.
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