Minnesota data center sector bounces back

Minnesota's paused data-center activity picked up late last year and now sports three expansion projects slated for 2021 in Minneapolis, Brooklyn Center and Chaska.

The industry update, provided by commercial real estate-services firm CBRE, shows that data-center activity is slowly returning after the COVID-19 pandemic forced many Minnesota companies to clamp down on budgets and postpone data-expansion projects during the first half of 2020.

During the second half of 2020, data-center activity rose, absorbing an additional 1.1 megawatts in the Twin Cities, mainly due to investments by two center providers. In 2021, new construction and planned expansions are expected to add another 15 megawatts of data-center capacity across the metro region.

CBRE officials said more growth is expected both locally and nationally due to swelling demand for 5G telecommunication technologies, Internet of Things services and the trend toward "edge computing," which positions facilities to be physically closer to clients.

So far, three local projects are expanding data-center capacity.

Dallas-based DataBank is building a 45,000-square-foot data center in Brooklyn Park. Flexential is expanding data-center capacity inside an existing facility in Chaska, while a shared data center in downtown Minneapolis is upgrading its cooling and power capabilities so it can support another 5 megawatts of data-center activity.

"Minneapolis has seen continued demand from local enterprise users in banking, health care and insurance," said Dan Peterson, CBRE vice president and data-center adviser for the Upper Midwest region. "Many users have secured smaller deployments at interconnection sites, partly due to pandemic-related needs."

Peterson said Minnesota will continue to grow via new construction and the addition of more leased and shared data-center facilities in coming years.

"We are not going to be a Dallas anytime soon, but the need for these types of facilities is present in most major populations," he said. "So it is an eventuality that there is going to be more development to come."

He added that along with the U.S. industrial sector, data centers were the highest performing public real estate sector in 2020. The market saw significant acquisition and investment activity by the Blackstone Group, Equinix, EQT Infrastructure and DataBank during the second half of last year.