Chuck Slothower//September 9, 2024//
Vacancy in the Portland area’s data center market slipped to an almost-nonexistent 0.5 percent in the first half of the year, according to a Cushman & Wakefield report that underlined demand for data center capacity.
Portland-Hillsboro saw 38 megawatts of data center absorption in the first half of 2024, with 527 megawatts under construction and 1,596 megawatts in operation.
“Significant opportunities remain across the state for growth in the data center market,” the brokerage stated in the report released last week.
Data center operators in Oregon have significant land positions and are ready to build when power is available, said Ali Greenwood, executive director of Cushman & Wakefield’s global data center advisory group.
“That is the major issue everywhere,” she said in an interview. “Overarchingly across the U.S, in data center markets across the world, there’s significant power constraints.”
Some operators are working to diversify their power sources with on-site generation. Digital Realty, a major operator, is switching its backup generator fuel at its PDX12 Hillsboro data center from diesel to hydrogenated vegetable oil. The move, along with similar switches at California data centers, is projected to reduce carbon dioxide emissions by 12,000 metric tons, according to Cushman & Wakefield.
Operators are looking to build on-site natural gas turbines and solar installations to feed data centers’ voracious appetite for electricity.
“You’re seeing people get creative with finding ways to bridge the gap with what they can get from their traditional utility,” said Greenwood, who is based in Dallas.
Hillsboro has emerged as one of the nation’s largest data center clusters. But in recent years, growth in the industry has shifted to Central and Eastern Oregon, where tech giants have built so-called “hyperscale” campuses in The Dalles, Umatilla County and near Prineville.
“The majority of development pipeline capacity now revolves around self-build master campuses across Eastern Oregon,” Cushman & Wakefield stated.
In Central and Eastern Oregon, tech companies were operating data centers totaling 684 megawatts, with an additional 500 megawatts under construction, the brokerage reported.
Google earlier this year announced a $600 million, 290,000-square-foot expansion of its data center campus in The Dalles. The expansion will be located on a 190-acre former aluminum smelting plant.
Meanwhile, Amazon is undertaking a large-scale expansion at multiple sites in Umatilla County, and several smaller projects are planned in the Hillsboro market.
Demand is evident, with approximately 85 percent of data center space nationally pre-leased. Cushman & Wakefield said.
“Going forward, expect pre-leasing and build-to-suit projects to dominate future development pipelines,” the brokerage said.