Where Is Miami's Place In The Data Center Explosion?

The U.S. data center boom is expected to reach $1T invested in the next five years, but Miami is being left behind.

Miami's leaders have touted the city as the Silicon Valley of the South, with companies like Microsoft and Apple opening offices in recent years. But data center development and demand haven't followed suit. 

The city's data centers have a 16.4% vacancy rate, according to Data Center Hawk data provided to Bisnow by CBRE. While nearly a fifth of data center space in the market sits unused, in major markets like Northern Virginia, Dallas and Atlanta, vacancy is below 3%. 

“Florida was never anybody's first choice for a data center,” Bruce Jackson, the vice president of CBRE Data Center Solutions, said.

The data center business has been supercharged by the artificial intelligence revolution, as technology providers have spent billions developing properties that can accommodate the vast computing power needs of the newest AI technology. In the first half of 2024 alone, data center construction totaled a record $9B and almost 12M SF, according to Dodge Construction Network.

But Miami hasn't caught any of that demand. The city has 69 MW of data center inventory, according to Data Center Hawk, compared to the 310 MW of capacity in Atlanta, the closest major data center market to Miami, at the end of June. 

While developers are building more than 1,289 MW of new data center capacity in Atlanta, according to CBRE, there were no active projects in Miami as of the second quarter.

CBRE said that is because of a lack of demand, largely attributed to the region's outdated facilities and challenging climate, including its vulnerability to hurricanes. More than 41% of the 292 hurricanes that have hit the U.S. since 1851 have hit Florida, including hurricanes Helene and Milton this year, which each caused tens of billions of dollars in damage.

“I was working with two national [companies], we call them hyperscalers, for the greater North Florida area, and after the second hurricane came by, they said, ‘No thank you, we're going to look elsewhere,’” Jackson said.

Data centers require a reliable power supply that is available at all times, temperature control, humidity control and the mitigation of extreme weather events — none of which are qualities that Miami is known for.

Miami’s data center market is also mostly older facilities, which contributes to the high vacancy rate, said Pat Lynch, executive managing director for CBRE’s data center solutions. As technology rapidly evolves, these aging facilities struggle to meet current demands.

“The first generation of space that I was building was 75 watts a square foot,” Lynch said. “We're now seeing stuff built in 600 watts a square foot and above. It's just a very different business.”

Miami does have one of the most important data centers in the country, however. The NAP of the Americas is the access point for a large portion of internet traffic for South America, Central America and the Caribbean, connecting 148 countries via subsea cable landings that connect right to the Downtown Miami building.

Equinix purchased the six-story, 750K SF facility from Verizon in 2016 as part of a $3.6B portfolio deal with 23 other facilities across America, and it is in the midst of an expansion, set to be complete in February, NBC Miami reported. 

“That is a very strategic interconnection asset where you've got data entering and leaving the country to go to the parts of the world, and so that makes it a very unique building,” Lynch said. 

An Equinix spokesperson said NAP of the Americas has a 30-MW load capacity, but declined to comment further.

Data Center Hawk's data shows there are no data centers under construction in the city, although 56 MW of capacity are in the pipeline, which would nearly double Miami's inventory. One data center developer told Bisnow it is constructing a new building it expects to deliver in 2026.

Iron Mountain is underway with a 150K SF, 16-MW data center dubbed MIA-1 in the heavily industrial Westview section of Miami-Dade County. 

“We see Miami as a welcoming environment for investment, with a dynamic, tech-intensive local economy, rising population, competitive pricing for power, and low corporate tax rate,” Iron Mountain Data Centers Vice President Jason Pfaff said in a written statement.

The facility is small for today's standards — the typical power load required for a modern data center has grown in just a decade from 10 MW, enough to power 2,000 homes, to 100 MW, enough to power 60,000 homes.

There is 3,872 MW of data center capacity under construction nationwide, nearly 80% of which is preleased, CBRE reported, showing how demand for secure and energy-efficient power is outpacing the construction boom. 

But still, the demand for data centers in South Florida is limited because developers must guarantee 24/7, 365-day availability and uptime, unlike other areas of real estate, Lynch said.

“It's the perception of hurricanes and global warming and all the things that generate faster, higher intensity, magnification of hurricanes and all that,” Jackson said. “It's not doing the data center market in Florida any good.”

The most important issue for data center developers going forward is their access to power. The power demands of AI are so immense that Microsoft, Amazon and other hyperscale users are investing billions into nuclear power to avoid the impending energy crunch.

At Bisnow’s South Florida industrial summit event in November, developers said they were interested in building data centers in Miami, but lining up a tenant and the requisite energy needed to power a data center has gotten in the way.

“In Florida, it's very difficult. We have looked at a couple sites that we think could work, but again, you have to go through a very comprehensive upfront sort of power study,” Altman Logistics Properties President Mark Levy said at the event. “You've gotta make a big commitment to [Florida Power and Light] on the front end that you're actually going to utilize the power. It's sort of a chicken or the egg sort of situation on some of these.”

An FPL spokesperson didn't respond to Bisnow’s request for comment, but the utility's website says it provides electric rates that are up to 35% below the national average and offers exemptions on electricity sales tax to make data center development more attractive.

The rise of AI, which demands closer proximity to data centers, could spark some demand in the coming years, but Miami may never become the sprawling hub many envision. Any increased demand is expected to be tied to the undersea cables, cable landing stations or in market demand due to the rising population, Lynch said.

In the meantime, massive data centers housing cloud services provided by companies like Microsoft, Amazon and Google that aren’t latency-sensitive will continue to focus on markets less vulnerable to catastrophic storms and sea level rise. But Miami does have the potential for growth.

“Being the third-most populated state, we will always need data centers, proximity to the data centers for low latency and other needs will always be there.” Jackson said. “But again, it's really all about the power.”