Silicon Valley is the #2 colocation data center market in the United States and the world due in part to its close proximity to all of the high-tech companies, internet, and cloud providers. Silicon Valley is second only to Northern Virginia, which holds the #1 position as the top data center market in the world.
Silicon Valley has approximately 2.9 million square feet (SF) of commissioned data center space with more than 411 megawatts (MW) of commissioned power. The demand for colocation space is very strong and is reflected in the 8.2% vacancy rate.
Vacant colocation space which stands at approximately 26 MW is scattered throughout retail colocation facilities throughout the valley. The wholesale colocation market supply is very tight despite newly constructed data center facilities coming online and expansion on existing facilities.
In terms of activities and specific areas, most data center activity in Silicon Valley occurs within the boundaries of Santa Clara. There are 40 colocation data center facilities located in an 18 square mile area which represents the world’s second-highest concentration of colocation data center facilities.
Silicon Valley Cities & Municipalities
If you look at a map of Silicon Valley, you will notice that it encompasses a lot of different cities and municipalities. Silicon Valley includes Campbell, Cupertino, Gilroy, Los Altos, Los Gatos, Milpitas, Morgan Hill, Mountain View, Palo Alto, San Jose, Santa Clara, Saratoga, and Sunnyvale. Although not officially considered to be in the Silicon Valley region, some have included Sacramento, Oakland, South San Francisco, and San Francisco.
From a Datacenters.com perspective, the majority of data center listings for “Silicon Valley” are located in Santa Clara, San Jose, Palo Alto and Sunnyvale with the large concentration of data centers located in Santa Clara.
Silicon Valley Utilities & Electricity Costs
From a power perspective, PG&E is the electric utility provider for the majority of the Silicon Valley area including San Jose. For the area encompassing San Jose to the east and westward up to and including Palo Alto and Santa Clara, Silicon Valley Power is the electric utility provider.
This is a very important consideration for data center owners and operators as well as colocation providers because of the differences in power rates. PG&E’s power rates can be 25%-40% higher than the rates charged by Silicon Valley Power. The cost delta in PG&E rates is a strong deterrent to considering any location outside of the Santa Clara municipality.
In examining the average electricity rates in the area, the average electricity cost is $.09 to $.15 cents per kilowatt-hour (kWh). These rates represent a significantly higher price per kWh than competing data center markets such as Las Vegas, Phoenix, Reno and Hillsboro.
Santa Clara also does not charge a city user tax for electricity. This difference results in an additional 5% cost-savings for its customers compared to San Jose or 3% for Sunnyvale. Further, Silicon Valley Power negotiates volume discounts for customers that consume large amounts of power. These rates are often negotiated on a case-by-case basis and kept strictly confidential.
Silicon Valley Land Cost & Availability
Land that is suitable for data center use in Silicon Valley is extremely scarce and expensive. This is especially true in and around Santa Clara. Silicon Valley land prices have skyrocketed over the past few years to where the cost is now approaching $4.4 million per acre. That’s more than $100 per square foot in some areas.
Colocation providers have been forced to rethink their designs and focus on going vertical to absorb land costs. The majority of new construction data centers built in Silicon Valley are now three or four-floor facilities with raised floors for colocation.
Silicon Valley Risks, Earthquakes, and Wildfires
Despite many risks, the Silicon Valley colocation market is very strong. The top risks include the threat of earthquakes. Silicon Valley and the Bay Area have been called tectonic time bombs. The Hayward fault runs through some of the most populated areas of the Bay Area from San Pablo Bay to Milpitas.
In addition to earthquakes, an uptick in wildfires has also caused increased concerns relating to rolling blackouts and the solvency of utility provider PG&E. PG&E filed for bankruptcy protection on January 14, 2019, after facing financial challenges associated with catastrophic wildfires that had occurred in Northern California.
Silicon Valley Colocation Pricing
Silicon Valley colocation pricing is relatively expensive compared to other markets. This is largely dependent on whether the pricing is centered around retail colocation or wholesale colocation.
For retail colocation, pricing starts at around $85 USD for a single server, per U with .05A/208V power circuit and 10 Mbps internet. You can also find full cabinet deals starting at around $500 per month. Many of these offers are from colocation resellers. Retail colocation pricing from one of the major colocation providers like Equinix, Digital Realty or Cyxtera is going to be over $800-$1,000 per month for a standard cabinet.
For wholesale colocation pricing in Silicon Valley, the cost per kilowatt-hour (kWh) for metered power ranges from as low as .032 cents to .059 cents per kWh. This is highly dependent on the wholesale colocation provider, data center facility and geographic location.
Top Colocation Providers in Silicon Valley
When searching for colocation services in Silicon Valley, you will find that all of the usual suspects as far as data center owners, operators and colocation providers. Major colocation providers have a big presence in Silicon Valley. Some of the market leaders include Equinix, Digital Realty, CoreSite, Vantage, Cyxtera, vXchnge, QTS Data Centers, NTT RagingWire and others.
Equinix: Silicon Valley Data Centers
Equinix has more than 570,000 square feet of colocation space across 14 locations in the region. Most notably, the largest Equinix data center campus in Silicon Valley is located at 3030 Corvin Drive in Santa Clara, California. This includes Equinix SV14, SV15, SV16, and SV17 data center facilities.
In addition to its campus in Santa Clara, Equinix operates colocation numerous data center facilities in Palo Alto, Sunnyvale, Redwood City, and San Jose. Equinix is by far one of the largest and most connected data center colocation providers in the area.
Digital Realty owns and operates 11 data center facilities, some of these leased to other colocation operators, totaling over 1.07 million square feet and 154 megawatts of power. Most Digital Realty Silicon Valley data center facilities are located in and around Santa Clara.
Digital Realty has two very large data centers in Silicon Valley. This includes the data center at 2220 De La Cruz Blvd, Santa Clara, 95050 features 60 MW and 360,000 square feet. Digital Realty 1100 Space Park Dr, Santa Clara, 95054 features 18 MW and 165,000 square feet.
In addition, Digital Realty offers two flagship data centers strategically located in San Francisco, a key connectivity hub for Silicon Valley. Digital Realty San Francisco colocation facilities include 365 Main, San Francisco, CA 94105 and 200 Paul Ave, San Francisco, 94124.
CoreSite: Silicon Valley Data Centers
CoreSite has four data centers, primarily in Santa Clara with two others in San Jose and Milpitas. CoreSite is quickly approaching 1 million square feet of colocation and wholesale powered shell space. It also has a major peering exchange located at 55 South Market in downtown San Jose.
Most notably, the CoreSite data center campus located at 2901 Stender Way, Santa Clara, CA 95054. Here you will find 790,000 total square feet across CoreSite SV3, SV4, SV5, SV6, and SV7. This Silicon Valley data center campus is ideal for high-density, compute-intensive requirements, and provides access to a robust ecosystem of hundreds of cloud, network and IT providers.
CoreSite Silicon Valley SV1 is located at 55 S Market Street, San Jose, CA 95113. This data center facility features 85,000+ square feet of colocation space and access to over 75 networks consisting of international carriers and multiple subsea cables.
Cyxtera: Silicon Valley Data Centers
Cyxtera Silicon Valley data centers offer more than 406,738 square feet of combined colocation space. All Cyxtera data centers meet ISO certifications and are Zone IV seismic compliant.
Most notably, Cyxtera Santa Clara SFO1 is located at 2401 Walsh Avenue Santa Clara, CA 95051. It features 8 MW of power and is part of a 170,000 square foot campus. Cyxtera SFO2 is located 4700 Old Iron Sides Drive, Santa Clara, CA 95054. Santa Clara SFO2 features 10 MW.
Cyxtera Sunnyvale SFO3, located at 1400 Kifer Road, Sunnyvale, CA 9408, features 49,000 square feet and 7.5 MW of power. It is less than 10 minutes from San Jose International Airport and just 6 miles from downtown San Jose.
Cyxtera Santa Clara SFO4 is near the heart of Silicon Valley. It is located at 1500 Space Park Drive, Santa Clara, CA 95054. This data center facility features 9 MW of power and 30,000 square feet of raised floor space.
QTS Data Centers: Silicon Valley Data Centers
QTS Data Centers offers a Santa Clara campus that totals 135,000 square feet and 55,000 of raised floor with 5+ MWs.
QTS Data Centers offers a multi-building data center campus located in the heart of Silicon Valley. This includes 2805 Mission College Blvd, Santa Clara, CA 95054 and 2807 Mission College Blvd, Santa Clara, CA 95054. The QTS Data Centers Santa Clara Campus features 35,322 square feet and 6.2 MW of power.
In addition to the Santa Clara campus, QTS Data Centers offers a data center facility in Sacramento. Although not technically Silicon Valley, QTS Data Centers Sacramento is located at 1100 North Market Blvd, Sacramento, CA 95834. This colocation facility features 92,644 square feet and 6MW of power with a dedicated, on-site substation. It serves as an alternative to expensive power and natural disaster risk of nearby Silicon Valley.
Vantage Data Centers: Silicon Valley Data Centers
Vantage Data Centers has built over 335,000 square feet across 21 acres with 75 MW critical IT load in place. It recently built another 21 MW on a new 9-acre campus. Vantage can accommodate up to ~70 MWs across the multi-story 541,000 square foot complex.
Vantage offers two data centers in Silicon Valley including Vantage SC1 and SC2 campus. Vantage SC1 is located at 2820 Northwestern Parkway, Santa Clara, CA. Vantage SC2 is also located at 2820 Northwestern Parkway, Santa Clara CA.
CyrusOne: Silicon Valley Data Centers
CyrusOne is one of the largest wholesale colocation operators in the United States. CyrusOne has acquired ~23 acres in Santa Clara for a new Silicon Valley campus projected to provide up to 100 MWs upon full buildout, including a new substation on site.
NTT RagingWire: Silicon Valley Data Centers
RagingWire has a 3.3-acre site for a four-story, 160,000 SF facility with 16 MWs across 64,000 square feet of raised floor available. RagingWire also markets to Silicon Valley customers to its Sacramento campus that can offer competitive power pricing in a location with significantly fewer risk factors.
Conclusion: Should You Buy in Silicon Valley?
The typical lawyer's answer is… it depends. Silicon Valley is home to American’s largest tech companies including Apple, Google, Facebook, Intel, Cisco, Oracle, and others. It also has a huge base of enterprises, businesses, and consumers that are tech-savvy and early adopters of the latest technologies. There are also major cloud service providers like AWS and Microsoft that have entered the Silicon Valley Market.
It’s a question of whether or not you want to be where the action is in terms of tech. It is up to you to decide if the risks and costs associated with colocation services in Silicon Valley are worth it. The fact remains, there are numerous other colocation markets vying for your business.
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