U.S. data center owner DataBank is planning to develop its largest project yet in Texas as it seeks to expand capacity to meet growing demand from artificial intelligence applications.
The initial phase of the new 480-megawatt data center campus in Red Oak, Texas, a suburb about 19 miles southwest of downtown Dallas, is expected to be complete by mid-2026. The 292-acre tract at Stainback Road and Batchler Road is expected to include eight, two-story data centers.
The Red Oak campus will be the largest in DataBank's portfolio by megawatts and acreage, DataBank President and Chief Financial Officer Kevin Ooley told CoStar News.
"There is a lot of demand for data centers today," said Ooley.
Workloads at companies have increased as filing systems convert to digital formats and technology is used in nearly every operation of a business, Ooley said. The continued use of cloud computing also adds to the demand for data center space, he said.
"We see a continuation of those drivers and entirely new workloads around AI and machine learning, which is incremental to what we've seen before and causing pent-up demand," Ooley added.
The AI boom has spurred companies to add to their AI talent base in major tech hubs and data center developers to add to their pipelines throughout the United States. Dallas-based DataBank recently secured a $725 million loan to help finance its growing development pipeline.
DataBank has quietly been working on the Red Oak campus for the last two years, Ooley said. The company closed on the acreage in Red Oak in March, with the tract having been under contract about a year leading up to the scheduled closing, Ooley said.
The initial phase of the Red Oak campus includes four buildings with a 400-megawatt substation from power company Oncor with the capacity to deliver up to 240 megawatts of critical information technology power, or the power needed to operate and funnel energy to potential tenants, Ooley said.
With the second phase of the project, the campus is expected to offer a total of 480 megawatts of critical IT power across eight buildings, DataBank said.
This is DataBank's third campus announcement in the past 12 months, with a 95-acre, 120-megawatt campus planned in the Atlanta region and an 85-acre, 192-megawatt campus planned in Northern Virginia.
In all, the three locations will add more than 450 acres of data center campuses with 5.8 million square feet of data center space and bring 792 megawatts of power to DataBank's portfolio — more than doubling its capacity — and positioning the company to capitalize on AI-generated demand in the years ahead, executives said.
Red Oak has become a major Dallas-area submarket for data center providers to develop new hubs. Google is one of the hyperscalers expanding in Red Oak.
The Dallas-Fort Worth region is one of the top U.S. data center markets, according to CBRE's latest data center report through the first half of 2024. The Dallas-Fort Worth region reported record preleasing activity, with data center users claiming 94.5% of the region's capacity, totaling 446.1 megawatts, under construction.
Northern Virginia remains the largest data center market in North America. Other primary North American data center markets outlined in CBRE's report include Silicon Valley, Chicago, Phoenix, the New York Tri-State area, Atlanta and Hillsboro, Oregon.