Mar 22, 2023 - Business

North Texas tops Silicon Valley among top data center hubs

This is pod two of IBM's SoftLayer data center in Dallas. Photo: Ben Torres/Bloomberg via Getty Images

North Texas is a more desirable region than Silicon Valley for data centers in North America, according to a new CBRE ranking.

Why it matters: The demand for data centers has increased significantly in recent years as more businesses look to store their data in secure, off-site facilities.

State of play: CBRE says power restraints in places like Silicon Valley and Northern Virginia have led operators to set up data centers in other markets with more capacity.

Between the lines: The capacity of Texas' energy grid has been a great concern since the freeze in February 2021.

Zoom in: Dallas-Fort Worth's data center inventory, now ranked second among primary markets, has grown by 247% percent since 2015.

  • Our region was offering 390 megawatts of data center inventory in the second half of 2022, up 23 megawatts since 2021, per CBRE. Rental rates were $120-$160 per month for 250 kilowatts.
  • In comparison, Silicon Valley had 380 megawatts of inventory, with rental rates from $155-$250.

Of note: Regions with data centers are designated as primary or secondary markets, depending on their inventory and net absorption.

Zoom out: Austin, San Antonio and Houston are among the top secondary markets for data centers.

Yes, but: Northern Virginia remains the world's top market for data centers, despite power and land restraints, CBRE says.

Reality check: There are differing viewpoints on emissions generated by data centers.

  • A 2020 study said the centers use less energy than expected.
  • But the U.S. Department of Energy has said data centers are among the most energy-intensive building types and consume 10-50 times more energy per floor space than a typical commercial office building.
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