The Northern California Data Center Market

The Northern California Data Center Market

Northern California is the second largest data center market in the country. Most companies objectively evaluating the market for expansion should be deterred by the area's expensive real estate, power costs, and risk of earthquakes. Despite these facts, consistent activity from large data center users and colocation/cloud operators over the last five years is the prime catalyst for the market's impressive ranking. Growth in the Northern California data center market has occurred in several cities south of San Francisco, with Santa Clara being home to the majority and in 2014, The Silicon Valley Leadership Group reported 33% of economic output in the area comes from technology companies. While the Northern California data center market benefits greatly from tech sector growth, it also heavily depends on it—posing a risk should the sector decline. Other industries consistently active and adding to the data center growth in Northern California include telecom, healthcare, financial, and retail.

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Power Overview

Northern California has a reliable and extensive electrical grid. In the Santa Clara/San Jose data center cluster, power is provided by both Pacific Gas & Electric and Silicon Valley Power. These companies encourage using renewable power such as solar, wind, and the more exotic biomass solutions. However, these "green" power sources can often increase a data center's total cost of ownership. The average power cost throughout Northern California is extremely high. These high costs often factor into the decisions for Northern California-based companies to co-locate in Portland, OR or Seattle, WA, where the typical power cost for data center users is approximately two times less.

Connectivity Overview

Legacy carriers AT&T, Sprint, and Verizon all run long-haul fiber connections on the west side of San Francisco Bay. These fast connections to the Internet backbone link tech businesses from San Francisco in the north to the concentrations of data centers south of the Bay in Santa Clara and San Jose. Fiber from newer carriers CenturyLink, Cogent, Electric Lightwave, Integra, Level3, M Power, Paxio, Telepacific, XO Communications, and Zayo all follow similar paths but also add connections to east Bay Area-suburbs of Berkeley and Oakland in the north, out to the growing eastern suburbs of Dublin, Pleasanton, and Livermore (home of the famous Jet Propulsion Labs), and circle back southwest to link up to San Jose/Santa Clara. Northern California also has a half-dozen localized fiber providers servicing specific areas. Municipal fiber is available in Palo Alto, Sun Bruno (just south of San Francisco proper), and San Leandro while Wilcon and Northern California Fiber serve the data center-heavy areas in Santa Clara and San Jose.

Hazard Risk Overview

The largest natural hazard threat in the Northern California market is earthquakes. According to the United States Geological Survey's 2014 findings, Northern California market is in one of the areas most likely to be impacted by an earthquake. Because of this, data center users and providers have invested significant capital in building facilities designed to handle these seismic events.

Northern California DATA CENTER MARKET OPTIONS

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