T
he Denver area is experiencing a surge in demand for data centers, with developers like Flexential breaking ground on new facilities to meet growing needs. The company recently started construction on its largest metro-area center, a 22.5-megawatt site in Parker that will add to its existing portfolio of 42 centers across the US. According to Flexential CEO Chris Downie, demand for data centers has increased significantly over the past two years.

    Real estate firm JLL reports that several transactions are underway and multiple inquiries have been made about large sites for new data centers. Companies are also in talks with local utilities to assess their ability to provide power to these facilities. "I'm a party to six different transactions myself, and I think we're going to see more deals announced soon," said Jason White, JLL's Denver managing director.

    A recent JLL report highlights the potential for significant growth in data centers in the Denver and Colorado Springs areas due to increasing demand from tech and AI customers. Currently, around 40 data centers are operational in Colorado, with most located in metro Denver. The market for colocation centers has doubled in size over the past four years, with vacancy rates at a record low of 3%.

    Large-scale users like Amazon, Meta, and Microsoft are building campuses in the region, attracted by factors such as Colorado's growing tech industry and relatively lower costs compared to saturated markets in Virginia and Silicon Valley. However, state officials have expressed concerns about the impact of data centers on local resources, including electricity and water supplies.

    Tract, a Denver-based developer, notes that Colorado lacks a crucial element for attracting "hyper-scale" projects: a sales tax exemption program. This has led companies like Microsoft to build in neighboring states with more favorable policies. Until this issue is addressed, Tract plans to focus on developing data centers in other states.