A high-tech industry presence has existed in Portland since the 1940s. The semi-conductor sector drove much of this growth with Intel, the state’s largest employer, playing a major role with its most advanced technical operations in Hillsboro. The growth in the area’s semi-conductor industry led Lattice Semiconductor to nickname the area the “Silicon Forest.” The growth in the semiconductor industry also provided a robust infrastructure that has enabled significant data center development.

More than 20 data centers representing a direct investment of nearly $2 billion reside in the Portland market. Wholesale operators such as Digital Realty Trust, T5 Data Centers, Flexential, Infomart Data Centers (now Equinix), QTS and others have made significant investments in the market along with enterprise users such as Adobe, Intel and NetApp. New operators are also entering the market with French web/cloud operator OHV announcing its second U.S. location last year with its new 112,000-square-foot data center in Hillsboro.         

Portland is attractive at all levels

As a community, Forbes ranked Portland as the No. 1 Best Places for Business and Careers for 2017. With a strong economy, low unemployment, quality of life, educated and diverse work force, and progressive state and local governments, the region enjoys significant qualities to solidify this stellar ranking.  The community enjoys a lot of in-migration due to the availability of numerous outdoor activities and an environmentally conscious community making the area attractive for college graduates.    

Within the data center and colocation sector, the Pacific Northwest, comprising Oregon and Washington, is considered one of the Top 10 data center markets in the U.S.  More importantly, the Portland region enjoys three key drivers that has enabled it to gain its fair share of new development:

  1. Substantial tax advantages
  2. Lower operational costs
  3. Greater access to burgeoning Asian markets 

Oregon provides three advantageous economic incentives that have continued to attract enterprise-class data center development to the state.  First, it doesn’t have a sales tax, which impacts the costs of development significantly. Second, it offers a 100% property tax abatement for up to five years. These abatements are provided in designated Enterprise Zones throughout the state and are concentrated in the Hillsboro market. Third, operational expenditures are kept low due to numerous location attributes.  Oregon has some of the lowest power costs in the nation. The availability of clean, reliable hydropower and efficiencies afforded by the region’s cooler climate are driving development. This allows data center owners/operators to market their sites as being “green.”

In addition, the Portland market has other critically material benefits for data center development. Fiber connectivity in the market is robust, with over 21 carriers in the market connected to the Hillsboro Data Center Ring. This allows for easy and low-cost access to service as the ring connects six of the market’s largest data centers along with several trans-Pacific submarine cables. These submarine cables are a big factor driving future growth.  

Portland offers more Asia-Pacific gateways

Portland challenges Seattle as a gateway to the Asia-Pacific markets, where the Portland data center market is more uniquely positioned. Hillsboro already has three trans-Pacific submarine cables. Last year, Flexential’s Brookwood Data Center in Hillsboro added the New Cross Pacific high-capacity, low-latency access submarine cable capable of 80 terabits per second.  Google’s and Facebook’s new Pacific Light Cable Network will be able to deliver up to 144 terabits per second once operational in Q4 of 2018. These additions are just a few of the recent expansions of new submarine cables scheduled to come online.  In comparison, Washington state has just one older and less capable Pacific submarine cable landing.     

The demand from the growing Asian markets, particularly China, Japan and South Korea in social media, digital finance and Internet of Things (IoT) is substantial. These cables are crucial for its digital connection between the United States and the Asian markets. This “connection” along with the other noted attributes for data center development will keep Portland well positioned for future growth. 

The competitive data center landscape

 Here is a list of some of the noted competitors in the retail and wholesale colocation sectors in the Portland region:

  • Infomart (now part of Equinix): Operates 340,000 SF totaling 24 MW with 11.6 MW coming on line.
  • T5 Data Centers: Operates a 69,000 SF data center with 8.5 MW in N+1 and 2N configurations, with adjacent expansion for over 10 MWs.
  • Digital Realty Trust: Operates 52,000 SF multitenant data center offering 5 MW in Hillsboro.
  • Flexential: Operates two data centers — the 50,000 SF Hillsboro I-II 10 MW data center and the 138,000 SF Brookwood 16 MW data center.
  • vXchange: Operates a 2 MW 40,000 SF carrier neutral data center.
  • QTS: Operates a 117,000 SF N+1 data center in Hillsboro.
  • OHV: Will open a 112,000 SF cloud and web hosting data center in Hillsboro in 2018.
  • EdgeConneX: Operates a Tier III 39,400 SF carrier neutral data center in Hillsboro.

Sources: Data Center Knowledge, CAPRE, WA Dept. of Commerce, Forbes, The Oregonian

Conclusions

The Portland market is positioned to take advantage of double-digit growth in data center demand. With the competitive nature of data center markets, Portland is uniquely qualified to be a growth leader for new data center development in the Pacific Northwest, with some of this growth driven by its ready access to the lucrative Asian markets. 

 

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