As one of the Top 10 US data center markets, the Pacific Northwest data center and colocation market encompasses the states of Washington and Oregon. This market is actually comprised of three separate regions: the Seattle metro market, the Portland-Hillsboro and the Central Washington community. This Pacific Northwest market is by far the largest geographical area of all of the major U.S. data center markets, where both Portland-Hillsboro and Eastern Washington are well over 150 miles from Seattle. While each market generally caters to different sectors of data center site selection, they all have robust infrastructure and compelling advantages as a desirable region for both colocation operators and hyperscale data center companies.

A brief history of the Pacific Northwest data center and colocation market

The Pacific Northwest region has always had a strong reputation in the high-tech sector especially in semi-conductors where Intel has had substantial operations in Hillsboro for a few generations.  Seattle also enjoys its place in the high-tech world with Microsoft, T-Mobile and Amazon (and its hyperscale cloud sibling, Amazon Web Services) having their home bases here. During the Internet boom of the late ’90s, the data center infrastructure was initially concentrated near the carrier hotels. In Seattle, the Westin Building and KOMO Plaza are the premier telecommunications hubs where the Seattle Internet Exchange (SIX) is also housed. In the Portland-Hillsboro market, the main carrier hotel is the Pittock Building.

As the carrier hotels filled up, the challenge, especially in Seattle, was to find other suitable data center sites with similar connectivity.  Of note was the success by the Sabey Corp. converting a former 1.5+ million square-foot Boeing campus in Tukwila south of Seattle into an interconnected data center hub for colocation and powered shell facilities.

The Pacific Northwest market also benefited from its relationship with the Asia-Pacific region. The link between these two included the continued addition of subsea fiber optic cables with landings both near Seattle and in Hillsboro. Hillsboro is especially benefiting from a concentration of these transpacific cables.  Wave Business, a leading fiberoptics company here, will complete in 2020 its “Hillsboro Data Center Ring II” to complement its Ring I, which will connect seven transpacific cables in 14 existing and planned data center campuses in Hillsboro.

Other competitive advantages

The city of Hillsboro has embraced the data center and colocation market, reflected in the significant economic incentives available to data center operators, probably the most aggressive on the West Coast, and its very competitive power pricing.  Seattle’s high construction costs and high taxes have muted demand in its urban core but have provided a growth opportunity in both Hillsboro and Eastern Washington.

Central Washington, with its hydroelectric power source, enjoys some of the lowest power rates in North America. While the region may not draw the retail colocation operators due to its remote geography, several hyperscale operators such as Microsoft and other wholesale colocation developers such as NTT have significant campuses here because of its low overall operating costs.

The competitive landscape

Here’s a look at some of the colocation operators and data center developers in the three regions of note:

SEATTLE

  • Digital Realty: Owns and operates the Westin Building.
  • Sabey Data Centers: This campus has several colocation providers leasing space.
  • Centeris Data Center: Developed by The Benaroya Co., this Puyallup campus has its own 77 MW substation.
  • Digital Fortress (DF Colo): This national operator has three colocation facilities across the Seattle region totaling ~120,000 SF and 13 MWs critical load.
  • Colocation Northwest (IsoFusion): Operates in five locations across the Seattle area, with its largest location on the Centeris Data Center Campus where they can offer over 60,000 SF and 7 MWs.

HILLSBORO

  • Flexential: this national colocation operator has two locations totaling almost 330,000 SF and 23 MWs capacity
  • QTS Data Centers: The 158,000 SF first building on this 88-acre campus will have ~24 MWs of critical load.
  • T5 DataCenters: This developer of wholesale and turnkey data center space has purchased additional land for its next phase.
  • RagingWire (NTT): Recently announced that it will deliver the first 6 MWs of critical IT load in mid-2020 on a campus that at build-out will total over 1 million sf and 144 MWs of data power. 

CENTRAL WASHINGTON

  • Sabey Data Centers: Has two Intergate campuses in this area, with the East Wenatchee campus having nine buildings across 130 acres and the Quincy campus with 420,000 SF of purpose-built data centers. Like any other data center enterprise in this region, both campuses can offer $.03/kwh of renewable hydroelectric power, one of the least expensive in North America.
  • NTT Data Centers: Its Quincy Campus has a 206,000 SF Tier III+ facility with 14 MWs
  • Vantage Data Centers: On its 68 acre campus, Vantage can offer over 500,000 SF and 70 MWs of potential load.
  • H5 Data Centers: With its acquisition of the Intuit data center, H5 offers wholesale colocation space.

Challenges ahead for Pacific Northwest

While the Seattle area’s higher taxes and construction costs were already mentioned as major challenges for future growth, the other two areas are also facing some potential headwinds.

In Central Washington, many communities are resisting future new facilities, as they are concerned about both the lack of significant jobs along with the related pollution with the current concentration.

Hillsboro is running out of great sites to build these data centers. Many of the large data center developers and operators, including T5, Digital Realty and Flexential have land-banked some sites. In addition, the city of Hillsboro has a site along NW Evergreen designated for only “people” space. Much of the property in this region will require significant infrastructure, including water and power, brought to the site. 

Conclusions

The Pacific Northwest region remains an attractive area for data center and colocation growth since it has some of the most robust infrastructure in the U.S. While higher construction costs seem to be the norm in many markets, this barrier is mitigated in many portions of this market by the lower operating costs.

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