Silicon Valley is the second largest data center market in the U.S., trailing only the Northern Virginia region — no real surprise given the Silicon Valley’s proximity to so many technology companies that have been focused on the Internet since the mid-90s. Technology companies in the Silicon Valley provided this region with a great head start and a ready supply of data center customers.
Silicon Valley’s importance was initially forged during the dot.com boom and was further enhanced later on by the growth in cloud computing and new technologies. Even though future demand remains very strong over the next two years, the region does have competitors.
The region is home to nearly 2.6 million square feet of commissioned data center space, representing 343 megawatts (MW) of commissioned power, according to data center Hawk.
Silicon Valley’s data center market is concentrated in Santa Clara where data center operators enjoy a significant discount exceeding 20% on its power with Silicon Valley Power over PG&E, which operates throughout the rest of the region.
Silicon Valley has several competitors in the market
Just about every major player in the retail and wholesale colocation sectors has a presence in the market, some of them significant:
Several other colocation operators with a national multisite presence have enterprise-class colocation facilities that will continue to be market players including:
Challenges may affect future data center growth in Silicon Valley
The region has several challenges ahead to maintain its No. 2 ranking and make it attractive during the site selection process that many other metro areas simply do not have:
These concerns and scarcity have enabled other Tier 1 markets that do not have to contend with these challenges to enjoy significant growth and challenge Silicon Valley for its No. 2 ranking in the next five years. Both Dallas-Fort Worth and Chicago, which are No. 3 and No. 5, respectively, are the likely markets to overtake Silicon Valley because of their minimal risk profiles and attractiveness during the site selection process.
The Silicon Valley region will continue to be a major player in the data center and colocation sector due to its proximity to the major players in the Internet and cloud sectors. Though its No. 2 status may be threatened, it will always be considered a critical market.