Data Center Demand Drives Growth in Risky Areas

The U.S. is the safest place to build a data center, according to a new study, but global demand is driving construction worldwide.

Kevin Fogarty

June 4, 2013

3 Min Read
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The United States is the least risky place to build a new data center, according to a a 2012 report, but riskier countries easily outdistance it in the growth of new data centers.

The study, published by the global real estate consulting firm Cushman & Wakefield, rated the desirability of 30 countries based on 13 characteristics, including political stability, sustainable energy reserves, availability of water, education level of the population and likelihood of natural disasters.

Risks were weighted differently depending on their potential impact on data center operations within the country. For instance, the cost of energy, ease of doing business and limitations on the bandwidth of international Internet connections were weighted more heavily than, for example, corporate taxes or GDP per capita.

The United States topped the list with a perfect Data Centre Risk Index score of 100, followed by the United Kingdom with 91, Germany with 83 and Iceland with 81. Of the 10 least risky countries, only two--Qatar and Hong Kong--were located outside Europe and North America.

The 10 at the bottom of the list include Mexico, which comes in at No. 27, and Poland at No. 22. Global superpowers Russia and China came in at 24 and 26, respectively, while India and Brazil trailed as Nos. 29 and 30.

Scoring poorly on a global estimation of risk isn't necessarily an indication companies should avoid building new data centers in that country, however, according to Cushman & Wakefield. Countries are ranked on a "macro level" that takes only national ratings into account. Particular regions or cities could be the perfect environment, or some extra spending could mitigate risk factors enough to make a new data center location suitably safe, according to the report.

For instance, demand for data center co-location facilities in Latin America is growing so fast it might outstrip the available space, despite an extraordinary increase in the number of data centers in the region, according to DCD Intelligence, the research wing of publisher Datacenter Dynamics.

According to DCD, more than 22,400 square feet of new co-location datacenter space is due to come on the market during 2013 in Brazil alone, which scored dead last in Cushman & Wakefield's competition for least-risky data center host country.

Chile will open 11,800 new square feet of space, and Colombia will add 10,520, according to the DCD report. Neither made the cut for consideration in the Risk Index

Less-developed markets, in fact, are driving data-center investments that could top $105 billion – 22% above last year, according to the latest of DCD's global surveys on growth in data center markets.

Much of that growth will come from the Asia Pacific region, where companies in fast-growing economies turn en masse to outsourcers and co-location services to upgrade their IT without rebuilding legacies themselves, the DCD report said.

An earlier survey from U.S.-based analyst firm IDC showed the number of data centers operating in the United Stateswould actually drop half a million--from 2.94 million to 2.89 million by 2016. The size of those data centers is growing fast enough that the total square footage will rise from 611.4 million to 700 million by 2016, however.

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