Data centers in Dallas, Texas form the largest hub for compute, storage, and communications exchange in the south central United States. While the market’s connectivity-rich carrier hotels, from colocation providers like Equinix, are located in the downtown area of Dallas, the ‘big’, purpose-built wholesale data centers, from operators such as Digital Realty, have a stronghold in Dallas’ sprawling northern suburbs.
In total, Dallas, Texas has over 150 data centers with more than 650 megawatts of multi-tenant commissioned power. The market’s ‘big’ data center presence has been driven by Dallas’ central location, abundant & affordable real estate, low power costs, fiber connectivity, and tax incentives.
Dgtl Infra provides an in-depth overview of data centers in Dallas, Texas, including their power, connectivity, and customer characteristics. Additionally, we highlight Dallas’ most critical data centers, such as Equinix’s Infomart at 1950 North Stemmons Freeway, as well as Digital Realty’s 2323 Bryan Street, 400 South Akard Street, and Richardson, Texas data center campus. Finally, Dgtl Infra identifies numerous reasons as to why there are so many data centers concentrated in Dallas and its surrounding suburbs.
Dallas Data Centers – Overview
Dallas, Texas and its neighboring suburbs comprise the second-largest data center market in the United States with more than 150 data centers and over 650 megawatts of multi-tenant commissioned power. The market is also the largest hub for communications and internet exchange points (IXPs) in the south central United States.
Data centers in Dallas are situated in concentrated clusters with connectivity-rich retail colocation facilities positioned in the downtown area of Dallas, while large-scale, purpose-built wholesale data centers are located in Dallas’ northern suburbs like Allen, Carrollton, Frisco, Garland, Irving, Lewisville, Plano, and Richardson.
Examples of Data Center Locations in Dallas, Texas
Relatively few data centers currently exist to the west, in the city of Fort Worth, Texas. However, Dallas’ southern suburbs, including DeSoto, Midlothian, Red Oak, and Wilmer, Texas, are emerging as new data center locations with sizable ongoing development projects.
In Texas, ERCOT (Electric Reliability Council of Texas) operates an independent power grid which represents ~90% of the electricity consumption in the state. Electric utilities operating within ERCOT are deregulated, meaning Texas is a competitive market, thus, prices for wholesale generation and retail electricity sales can often be lower than the national average.
To this end, electricity rates in Texas average between $0.04 to $0.06 per kilowatt-hour (kWh), placing Dallas among the lowest power rates for Tier-1 data center markets in the United States.
Additionally, Texas has an abundant supply of in-state power sources, particularly natural gas, which is shown below through ERCOT’s data on generating capacity and energy use:
In Texas, the price of power is typically set by natural gas-fueled generation facilities, with wholesale prices generally tracking increases or decreases in the price of natural gas.
Dallas’ connectivity is characterized by having 3 main carrier hotels, namely Equinix’s Infomart at 1950 North Stemmons Freeway in downtown Dallas, as well as Digital Realty’s 2323 Bryan Street and 400 South Akard Street, which are both in downtown Dallas as well.
In addition, Dallas has strong lit fiber connectivity with several bandwidth options available and robust last-mile fiber connections. For example, enterprise and dark fiber providers operating in Dallas include AT&T, Charter Communications, Cogent Communications, Colt, Comcast, Consolidated Communications, Cox Communications, Crown Castle, FiberLight, LOGIX, Lumen Technologies, Uniti, Verizon, Windstream, and Zayo.
Dallas-Fort Worth – Fiber Network Map
As shown above, fiber networks in the Dallas-Fort Worth area run from downtown Dallas, up through Dallas’ northern suburbs like Carrollton, Plano, and Richardson, and then further west through Irving and Fort Worth.
Data Center Customers in Dallas
Dallas experiences a diverse set of local, regional, and national demand for its data center capacity given that a significant number Fortune 100 companies have located their headquarters in the Dallas-Fort Worth area.
In particular, large enterprises in the financial services, healthcare, insurance, technology, and telecommunications industries are significant customers of data centers in Dallas. For example, enterprises such as AT&T, athenahealth, Bank of America, Charles Schwab, Dropbox, Exxon Mobil, J.P. Morgan, LinkedIn, Rackspace, Refinitiv, Sony, State Farm, Texas Instruments, T-Mobile, and Toyota are all utilizing data center capacity in Dallas.
Additionally, hyperscalers and cloud service providers (CSPs) like Apple, Google Cloud, IBM Cloud, and Meta Platforms (Facebook) have been a source of demand for data centers in Dallas. Finally, sizable data center requirements from entities associated with the federal government are also prevalent in Dallas.
Overall, demand for data center capacity in Dallas has been consistent over the past several years, with 20 megawatts to 30 megawatts of absorption annually. As such, Dallas’ vacancy rate has recently dropped below 10%, highlighting the improving supply and demand dynamic in this market.
Types of Data Centers in Dallas – Colocation, Wholesale, Cloud
In Dallas, there are three main types of data centers: retail colocation, wholesale, and cloud / hyperscale. Examples of the top data center providers in Dallas from each category are listed below:
|Retail Colocation||Wholesale Data Center||Cloud / Hyperscale|
|Equinix||Digital Realty||IBM Cloud|
|Flexential||QTS Data Centers||Meta Platforms (Facebook)|
|Cyxtera||STACK Infrastructure||Amazon Web Services (AWS)|
In total, over 50 multi-tenant data center providers serve the retail colocation and wholesale segments of Dallas. Generally, wholesale and hyperscale lease signings – meaning greater than 1 megawatt – account for ~75% of Dallas’ market absorption. While retail colocation contract signings – meaning less than 1 megawatt – contribute ~25% of Dallas’ market absorption.
Below we provide further detail on Dallas’ most important retail colocation provider (Equinix), wholesale data center operator (Digital Realty), and cloud service providers (IBM Cloud and Google Cloud).
Equinix – Data Centers in Dallas
Equinix operates data centers in the Dallas area at 5 different locations, comprising 8 distinct facilities, because the company controls multiple suites in the Infomart building located at 1950 North Stemmons Freeway.
Collectively, Equinix operates over 420,000 square feet of colocation space in the cities of Dallas, Irving, and Plano, at its DA1, DA2, DA3, DA4, DA6, DA7, DA9, and DA11 data centers:
|1950 North Stemmons Freeway, Suite 1034||DA1||Dallas||30,355|
|1950 North Stemmons Freeway, Suite 2027||DA2||Dallas||24,542|
|1950 North Stemmons Freeway, Suites 1039A & 2048||DA3||Dallas||25,869|
|2323 Bryan Street, Suite 1400||DA4||Dallas||12,533|
|1950 North Stemmons Freeway, Suites 2049 & 3050||DA6||Dallas||107,785|
|6653 Pinecrest Drive||DA7||Plano||37,913|
|2222 East Grauwyler Road||DA9||Irving||36,558|
|1990 North Stemmons Freeway||DA11||Dallas||144,560|
Of Equinix’s Dallas data center presence, Infomart, which spans DA1, DA2, DA3, and DA6, is the company’s most important location in the market:
Infomart Dallas – Equinix DA1, DA2, DA3, DA6
Equinix’s Infomart data center is located at 1950 North Stemmons Freeway in Dallas, Texas and comprises the following four facilities:
- DA1: 1950 North Stemmons Freeway, Suite 1034
- DA2: 1950 North Stemmons Freeway, Suite 2027
- DA3: 1950 North Stemmons Freeway, Suites 1039A & 2048
- DA6: 1950 North Stemmons Freeway, Suites 2049 & 3050
Together, Equinix operates over 188,500 square feet of colocation space at its Infomart data center in Dallas, via its DA1, DA2, DA3, and DA6 suites.
Through its Infomart data center, Equinix offers connectivity to over 140 competing network providers – making it the densest interconnection hub in the Dallas market and the largest internet exchange by participants and traffic volume in the south central U.S. At the same time, Equinix’s Infomart campus is the fifth most-interconnected data center in the United States.
Additionally, Equinix’s Infomart data center provides access to two of the largest peering hubs or internet exchange points (IXPs) in the Dallas market, namely DE-CIX Dallas and NetIX.
Digital Realty – Data Centers in Dallas
Digital Realty operates 21 data centers in the Dallas area, which collectively comprise over 3.55 million net rentable square feet (NRSF) and 101 megawatts of white space IT load. The Dallas presence of Digital Realty also includes data centers in the cities of Carrollton, Lewisville, and Richardson.
In the market, Digital Realty’s important carrier hotels are located at 2323 Bryan Street and 400 South Akard Street – both in Dallas, Texas. While Digital Realty delivers large-scale facilities to cloud service provider (CSP) customers, such as IBM Cloud, out of its data center campus in Richardson, Texas, which is located to the northeast of Dallas.
2323 Bryan Street – Digital Realty
Digital Realty’s data center at 2323 Bryan Street in Dallas, Texas is located in the 26-story Univision Tower, which spans 454,000 square feet. The 2323 Bryan Street facility is used by more than 60 carriers, making it the second most important interconnection and colocation hub for Dallas.
400 South Akard Street – Digital Realty
Digital Realty’s data center at 400 South Akard Street in Dallas, Texas is located in the former home of the Federal Reserve Bank of Dallas. The 400 South Akard Street facility spans 269,563 net rentable square feet (NRSF) and has nearly 30 carriers on-site.
Additionally, Digital Realty’s 400 South Akard Street facility offers fiber connections, via dense wavelength-division multiplexing (DWDM) technology, to Dallas’ other major carrier hotels at 1950 North Stemmons Freeway and 2323 Bryan Street.
Richardson, Texas Campus – Digital Realty
Digital Realty’s Richardson, Texas data center campus supports large-scale workloads from hyperscalers such as the cloud service providers (CSPs) and internet companies. Known as “Digital Dallas”, this 69-acre data center campus is served by diverse substation feeders to Digital Realty’s dedicated privately owned substation.
As shown above, the following 8 buildings on the Digital Dallas data center campus comprise 85 megawatts of IT load capacity across more than 1.25 million net rentable square feet (NRSF):
|Data Center||City||sqft||IT Load MW|
|1232 Alma Road||Richardson||105,726||6.8|
|900 Quality Way||Richardson||114,922||7.0|
|850 East Collins Boulevard||Richardson||121,366||6.9|
|950 East Collins Boulevard||Richardson||121,286||7.2|
|904 Quality Way||Richardson||62,636||4.5|
|907 Security Row||Richardson||138,450||9.6|
|1210 Integrity Drive||Richardson||473,970||36.0|
|1215 Integrity Drive||Richardson||117,876||7.0|
Examples of the large-scale cloud service providers (CSPs) and internet companies that Digital Realty’s Richardson, Texas data center campus serves are IBM Cloud and LinkedIn.
Additionally, Digital Realty operates a connected campus strategy, whereby these hyperscale customers can create a virtual presence at Digital Realty’s connectivity-rich carrier hotels, such as 2323 Bryan Street in Dallas, Texas – since both campuses are connected together with fiber.
Cloud / Hyperscale
Cloud service providers (CSPs) and over-the-top (OTT) media service companies, collectively known as hyperscalers, are actively developing new data centers in Dallas. Specifically, IBM Cloud, Google Cloud, Meta Platforms (Facebook), and Amazon Web Services (AWS) are hyperscalers with a meaningful and/or growing data center presence in and around the city:
IBM’s Dallas cloud region, known as us-south, has 3 availability zones and is located in Dallas, Texas.
In 2018 and 2019, Google purchased hundreds of acres of land in Dallas’ southern suburbs of Midlothian and Red Oak, Texas. By early 2021, Google had opened the first phase of its $600 million data center in Midlothian, Texas, which is located ~25 miles southwest of Dallas. Similarly, Google has made a commitment to invest $600 million into its Red Oak, Texas data center – the location of which is below:
By June 2022, Google Cloud opened its Dallas cloud region, known as us-south1, which has 3 availability zones.
READ MORE: Google Cloud’s Data Center Locations
Meta Platforms (Facebook)
In 2015, Meta Platforms (Facebook) broke ground on its Fort Worth, Texas data center campus located at 4500 Like Way, with its initial buildings coming on-line in 2017. In total, the company is building 5 data centers at this campus, comprising more than $1.5 billion of investment, which will ultimately span a total of 2.6 million square feet.
Amazon Web Services (AWS)
Amazon Web Services (AWS) is in the process of developing a new 29,840-square foot data center in the city of DeSoto, Texas, which is located ~15 miles south of Dallas. The $6 million development project is scheduled for completion at the end of 2024.
Presently, Amazon Web Services (AWS) does not have a cloud region in Texas. However, the company has an AWS Local Zone facility in Dallas, with its parent region being US East (Northern Virginia).
Why are There So Many Data Centers in Dallas?
In Dallas, there are so many data centers because of the city’s central location, abundant & affordable real estate, low power costs, dense & diverse fiber connectivity, tax incentives to promote data center growth, strong economy, and inexpensive operating costs.
Dallas’ central location in the United States makes it an important transit point between the east and west coast of the country. Specifically, the city resides at nearly equal distances from the two of the largest data center markets in the U.S. – Northern Virginia and Northern California (Silicon Valley).
2) Real Estate
An abundance of developable land and affordable prices in Dallas makes the market attractive for building large-scale data centers. For example, recent site sales with data center use have been priced at less than $500,000 per acre, which ranks as the lowest for Tier-1 data center markets in the United States.
At an average range of $0.04 to $0.06 per kilowatt-hour (kWh), Dallas has one the lowest power rates for Tier-1 data center markets in the United States.
Dense and diverse metro and long-haul fiber routes run through Dallas, providing high-bandwidth, low-latency connectivity within Dallas and to major markets across the United States.
The State of Texas offers low tax rates and tax abatement incentives for large data centers. Particularly, Texas provides an exemption from sales taxes paid on the purchases of hardware (e.g., servers and generators) and software for data centers.
Dallas-Fort Worth’s economy grows by around 4% to 6% annually and the region has an unemployment rate of ~3.5%, positioning both metrics favorably to U.S. averages.
7) Operating Costs
Dallas’ cost of doing business is 4% lower than the U.S. national average. Also, the cost of doing business in Dallas is less than half the cost of doing business in other Tier-1 data center markets in the United States like New York or Silicon Valley.
What are the Challenges to Dallas’ Data Center Market?
While Dallas’ data center market possesses strong demand drivers, the region also faces certain fundamental challenges to data center growth, including a hot climate, natural disaster risk, and the potential for electricity price volatility.
- Climate: Dallas has a hot climate and is relatively more humid, as compared to other Tier-1 data center markets in the United States. Furthermore, Dallas has a high number of cooling degree days (CDD) and is susceptible to water shortages
- Natural Disasters: Dallas faces risks from floods and tornadoes, which could cause service interruptions or significant infrastructure and equipment damage
- Electricity Price Volatility: in 2021, Winter Storm Uri showed that Texas’ power market is susceptible to periods during which ERCOT power prices rise significantly as a result of the scarcity of available generation resources relative to power demand. For example, in ERCOT, power prices have reached up to the $9,000 per megawatt-hour (MWh) price cap at times of high demand