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Data Storage: Digital’s Other Industrial Demand Driver

E-commerce isn’t the only product of the digital world that’s fueling demand for industrial space. The increasingly connected world is fostering accelerated demand for data storage, making data centers a mainstream property type within the industrial sector, says Marcus & Millichap’s National Office and Industrial Group in its latest outlook report.

Just as they require massive amounts of warehouse space to store inventory,  e-commerce companies—along with tech giants such as Facebook, Google and Microsoft—also rely on massive amounts of tracked data. This has led them to set up data storage operations.

Many states now incentivize data center development with significant tax breaks. From the standpoint of state governments, these projects create new full-time jobs and potentially generate additional employment through technology-related development.

“In 2009, only seven states provided incentives, but now 30 states offer inducements for large data center projects,” writes Marcus & Millichap’s Brandon Niesen. Much of this stems from the high costs of these developments compared to other industrial projects, since proximity to fiber optic lines and power grids is essential, putting a premium on required land.

Further, Niesen writes, the rapid expansion of data centers is “piquing the interest of investors, offering them additional investment opportunities and providing them a viable portfolio diversification option amid the maturing cycle.”

Pictured: A Facebook data center campus in New Albany, OH.

For comments, questions or concerns, please contact Paul Bubny

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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