Tech Startups Fuel Data Center Development

Denver’s flourishing tech startup market and exploding population have created an increased demand for data centers that developers are responding to.

With 11.6 megawatts of capacity under construction, Denver ranked first for its data center supply pipeline among the secondary markets studied in CBRE’s latest U.S. Data Center Trends Report.

“We’re seeing a lot of capacity being brought onto the market preparing for what we feel like is going to be substantial growth,” CBRE Senior Vice President of Data Center Solutions Greg Vernon said. “There’s so much more data being created now than there was previously, and it needs to be housed somewhere. Anywhere you have population centers, there needs to be more data stored in those areas so users have quicker access to the data.”

While net absorption was down from the previous year, totaling 1.8 MW in the first half of 2018, it matched Denver’s historical annual averages. Wholesale occupiers in Denver primarily came from the healthcare and technology industries.

“There are a lot of tech startups in this market,” Vernon said. “As they mature, their data footprint is going to grow. Companies in early stages want their data centers close to where their people are. With the tech-centric business climate we have here, there will be more absorption of data center space.”

Denver’s largest data center has about 16 MW of capacity in a roughly 180K SF building, Vernon said, noting that the industry has changed from converting old warehouses into data centers to building from the ground up. Key requirements for a location include access to power from multiple substations and telecommunications access from multiple carriers. The location should not be next to a railroad track, flight path or area where there are a lot of hazardous materials, Vernon said.

“In Denver, there’s enough land available where most of the buildings you see going up now are new,” he said.