The New York Data Center Market

The New York Data Center Market

America's largest city is also a top market for data centers. While New York City's high cost of doing business often deters providers, some companies require a data center located in the city. Almost all data centers in the New York City (NYC) market are concentrated in Manhattan, with the majority of providers in retrofitted high-rises. Users find the NYC data center market attractive due to strategic location and robust connectivity. Most of the data centers in NYC are in older buildings that have been converted into data centers. The aged infrastructure is causing data center operators to focus on upgrading facilities to meet the security and redundancy needs of data center users in the city.

The city's infrastructure for connectivity, especially in Manhattan, is world class due to the business needs of the area's large companies. Many firms with larger data center requirements choose to move out of the city for total project cost, hazard risk or safety reasons. Industries with consistent data center requirements in the NYC market include financial, healthcare, insurance, media, technology, telecommunications, and transportation.

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Power Overview

NYC's transmission lines and substations in Manhattan provide stable power on a robust but aging grid. Consolidated Edison Company of New York (ConEd) is the investor-owned and state-regulated utility providing electricity to NYC. ConEd's rates are extremely high and political initiatives have done little to either maintain or lower these rates. In 2015, the state's legislature instituted the New York State Energy Plan to promote a larger share of renewable energy sources in overall electricity generation and transmission. To comply with these green initiatives, ConEd plans phased infrastructure upgrades to a "smart" electric grid along with adding renewable energy generation sources. However, the increased investments required by ConEd to meet new regulations—along with a sharp decrease in NYC's overall electric supply due to the closure of the Indian Point nuclear power plant by the end of 2015—guarantee rates will increase in the future.

Connectivity Overview

Over two dozen fiber carriers offer connectivity in New York City. Nationally-known carriers such as CenturyLink, Level3, Sprint, Verizon, XO, and Zayo offer a mix of both metro and long haul fiber. Regional and specialized providers such as Axiom, Fibertech, and Lightower serve Manhattan's data center clusters with high-quality fiber. NYC also serves as a network interconnection point at the eastern edge of the United States to the transatlantic undersea Internet cables running between North America and Europe. International providers such as Global Cloud Xchange offer direct connections to the financial hubs across the Atlantic.

Hazard Risk Overview

The New York City market is at low risk for natural disasters such as hurricanes and earthquakes. A greater concern for data center providers and users in NYC is the man-made disaster of terrorism in a post-9/11 world. Because of the city's population density, damage done by either the region's infrequent threats can be magnified. For years, data center providers in the NYC market build redundancies into their systems to mitigate any potential damage from disasters.

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