Commercial Real Estate

CRE Opinion: Continued Strong Growth in DFW Data Centers

The decade-long positive impact of the data center industry on local real estate continues into 2018.

The Dallas-Fort Worth real estate industry continues to enjoy the fruits of the data center boom.   Industry analysts agree that in excess of 50 megawatts in data center capacity was added in North Texas in 2017, making this market a strong second in data center growth compared to Northern Virginia, the largest data center market in the country.

Data centers—as commercial real estate industry professionals now fully understand—are large, secure, highly-connected facilities where nearly everything you do on your computer, tablet, and smartphone takes place. The decade-long positive impact of the data center industry on local real estate continues into 2018. Parcels of land with access to power and connectivity are highly desirable while the potential to be repurposed into a data center is now part of the evaluation process for existing industrial buildings seeking a second life.

Diane M. Morefield

All Indicators Suggest Continued Growth: The fundamentals that are driving data center growth in Dallas remain strong.  Many Fortune 500 companies and other large enterprises have a significant presence in Dallas, and they have technology needs to be served. The most significant and exciting trends in business and technology are creating huge demand for data centers. Machine learning, big data, artificial intelligence, the internet of things, robotics, and many other business trends are dependent on a physical data center for the IT infrastructure to support these technologies.

Technology continues to become even more central to the DFW business ecosystem. An estimated 140,000 people work in technology in North Texas and a pair of studies suggest that somewhere between 32,000 and 40,000 new technology jobs have been created here in just over a five-year span. Only San Francisco has generated and attracted more tech talent in recent years. In Dallas and throughout Texas, schools are developing specialized curriculums to produce graduates qualified to fill critical tech jobs in DFW and statewide.

Financial Impact of the Cloud: Permanent changes in behavior, the way we work, communicate, and consume media continue to drive remarkable growth for the major cloud companies. In the first quarter of 2018, Amazon Web Services’ year-over-year cloud revenue increased 49 percent, Microsoft Azure grew 93 percent, and Google announced that the company recently surpassed $1 billion in quarterly cloud earnings for the first time. This data further exhibits customer demand and shows we’re still in the early innings of technological expansion and cloud adoption.

Dallas Reaps the Benefits: With an impressive work force and an enviable business environment, Dallas has benefited from the data center boom. DFW’s savvy commercial real estate community has seized on the opportunity and has worked in conjunction with the data center industry to jointly prosper. The result has been significant employment gains as well as a robust technology infrastructure that provides a wide range of service options that can be availed by all organizations, from government to startups to the largest enterprises. The strength of the data center industry is an important component in creating the technology success stories that can be told throughout North Texas, all driven by the way our lives, both personally and professionally, have become more tech-centric.

Diane M. Morefield is executive vice president & chief financial officer for Dallas-based CyrusOne, a publicly-traded REIT and a leading global data center services provider.