Secondary data center markets: The benefits behind tier 2 location

Data creation is racing toward 200 zettabytes annually, driven by billions of connected devices and the explosive growth of AI workloads. As demand for power and capacity outpaces supply in legacy data center hubs, enterprises and hyperscalers are turning to secondary markets to scale infrastructure, reduce latency, and stay ahead of demand.

The expansion of digital services and platforms on a global scale is driving demand for advanced data center capabilities around the world. However, long-standing primary data center markets are unable to keep pace with this rising demand, prompting hyperscalers and enterprises to leverage “second-tier” markets to support their infrastructure and critical workloads. Hyperscale data centers, which support massive cloud-scale workloads and platforms, accounted for 44% of total global capacity as of Q1 2025.

What is a secondary data center market?

A secondary data center market is an area located outside of traditional, core data center locations such as Northern Virginia, Silicon Valley, New York City, and Chicago. While tier 2 locales have historically had less of a data center presence, they have become magnets for data center development thanks to ample land, power, and water availability; lower energy costs; and access to clean energy sources. Most organizations implement a secondary data center, also known as a disaster recovery (DR) site, to ensure business continuity in case of a failure at the primary data center, often leveraging colocation hosting for high-availability infrastructure.

Data center tier level classifications

Data center tier level classifications, established by the Uptime Institute, provide a standardized way to assess the reliability and performance of data centers. The four-tier system—ranging from Tier I to Tier IV—reflects increasing levels of redundancy, fault tolerance, and maintainability. For organizations running critical systems or requiring high availability and low latency, understanding these tiers is essential. For example, a Tier IV facility offers the highest reliability and redundancy, ensuring that even during maintenance or unexpected failures, data and systems remain available. By aligning their business needs with the appropriate tier, organizations can optimize performance, minimize latency, and ensure their most critical applications and data are protected against downtime.

Trends driving enterprises to secondary data center tiers

Secondary data center markets are gaining attention in response to a series of trends that are driving enterprises and hyperscalers beyond primary markets, underscoring the growing importance of understanding what a data center is and why it matters.

Demand is outpacing capacity

With intensifying digitalization, demand for data center services is surging. Data centers in primary markets are oversubscribed and unable to meet rising needs. Lacking both the available land to build new facilities and the electricity to power them, these markets remain constrained. In fact, Dominion Power recently notified its Northern Virginia customers that it could not meet data center power demand in the region. This is driving data center operators and hyperscalers to secondary markets that have access to the necessary land and power to meet surging capacity requirements. The Uptime Institute's Tier Classification System defines four distinct data center redundancy tiers—Tier I, Tier II, Tier III, and Tier IV—each with expected levels of reliability and uptime guarantees, setting standardized benchmarks for performance and availability.

The work-life landscape has shifted

COVID-19 greatly altered the digital landscape, introducing a remote-work environment that is here to stay. During the pandemic, many individuals also moved away from major cities for an improved cost of living and quality of life. With more people living and working outside of core locations, computing has become decentralized. Most organizations now operate more than one data center to ensure fault tolerance, disaster recovery, and continuous operational availability.

Despite this dispersed landscape, end users still need low-latency access to work productivity suites such as Microsoft Office and Google Teams, corporate data, media streaming services, and any number of other applications to remain productive and entertained. This is particularly crucial to support the growing use of real-time applications such as video conferencing, autonomous vehicles, stock trading, live broadcasting, and multiplayer gaming. While primary data center markets cannot deliver the same rapid delivery speeds across this more distributed user plane, secondary markets allow enterprises to position compute closer to end users to address latency and performance requirements as part of a broader strategy that integrates data centers, interconnection, and edge computing.

The shift in data gravity

As hyperscalers establish presences in high-growth tier 2 markets, enterprises that utilize their services follow them to achieve low-latency connectivity. Cloud services are often deployed in multiple data centers to ensure redundancy and disaster recovery, supporting business continuity and resilience, and requiring flexible strategies to overcome multicloud connectivity challenges and solutions. This dynamic alters data gravity—which has historically been in core markets—and builds a powerful ecosystem within these second-tier areas.

Improved infrastructure

Core data center markets once held a monopoly on robust fiber connectivity and energy delivery. However, as fiber and power capacities have spread into more regional areas, it has opened the gates to allow secondary locations to compete with tier 1 markets. Improved infrastructure in these areas now often features multiple power and cooling distribution paths and redundant power supplies, significantly enhancing reliability and uptime. As an added perk, these resources are less expensive than in primary tier 1 markets.

Geopolitical and government influences

The geopolitical landscape is also increasing demand for data center services within the U.S. As global unrest and security risks continue to threaten overseas businesses, many enterprises are repatriating their operations to the United States, further straining capacity. Government programs are also increasing demand within the U.S. Government, and regulatory requirements are driving the need for secure, resilient, and compliant data infrastructure in secondary markets, as agencies seek to meet data residency, security, and legal standards. The CHIPS and Science Act of 2022 offers Federal aid to the semiconductor industry to construct U.S.-based manufacturing facilities. Companies like Micron and Intel are building facilities in secondary markets to take advantage of this aid, as well as the additional tax incentives offered within these areas.

How secondary data center markets benefit enterprises

Recognizing the challenges of traditional data center tiers and markets—as well as the changing digital business landscape—data center operators and hyperscale cloud providers are building facilities in high-growth secondary markets such as Hillsboro, Oregon; Minneapolis, Minnesota; and Nashville, Tennessee that offer the acreage, renewable power, and cooling options, and diverse interconnections. While a ready supply of land and power are the principal drivers attracting organizations to these locations, these regions also offer additional benefits.

Reduced costs

Cost is a key driver for every business. Secondary markets offer lower energy and real estate costs than core markets to minimize the total cost of ownership (TCO). Many of these markets also offer attractive state and county tax incentives for additional cost savings. For example, Oregon does not levy a sales tax, and Arizona, Georgia, and Minnesota offer tax abatements to data center operators—and potentially their customers.

Room to scale

Moving data centers is complex, time-consuming, and expensive, and businesses want to avoid relocating their environments because of capacity issues. Before investing in infrastructure in tier 2 locales, data center operators thoroughly vet areas to ensure the necessary land, power supply, cooling systems, and connectivity options are available to provide customers with the data center services they need to support existing workloads and projected demand. Scaling data centers in these regions often involves deploying additional servers and implementing advanced software solutions to efficiently manage growing workloads and operational requirements.

Improved sustainability

Enterprises are prioritizing sustainability and the use of clean energy, and some regional markets offer improved access to these energy sources. For example, Minnesota is ranked as a top area for wind turbines, while Oregon offers improved access to water sources compared to drought-prone California to enable hydroelectric power. These locations may also offer lower-cost locations for solar panel fields than states with higher real estate costs or less available acreage. Advanced data centers further support sustainability and operational efficiency by using environmental monitoring systems to detect and respond to outside air pollutants.

Limited latency

While primary data center markets built their reputations on dynamic, low-latency connectivity options, the pandemic-altered digital landscape requires rapid data delivery to a broader range of locations. Regional markets support edge deployments that allow businesses to place data and processing closer to end users to ensure the performance of applications—especially as wearable devices and other real-time applications play increasingly critical roles in business and personal lives.

Disaster recovery and business continuity in secondary markets

Disaster recovery and business continuity are vital for organizations leveraging secondary data center markets. While these markets offer advantages like lower costs and greater power availability compared to primary data center hubs such as Northern Virginia, they may also present challenges in redundancy and latency. To address these, organizations can implement disaster recovery strategies such as replicated data storage, redundant systems, and automated failover protocols. These measures help maintain high availability and ensure that critical business operations and data center services continue uninterrupted, even in the event of a local outage or disaster. By prioritizing robust disaster recovery planning, organizations can confidently expand into secondary markets while safeguarding their data and services.

Data security and protection measures in secondary markets

Ensuring data security and protection is crucial for organizations operating in secondary markets, where infrastructure and security resources may not match those of primary markets. To mitigate risks, organizations should deploy comprehensive data security measures, including encryption, strict access controls, and continuous monitoring of critical systems. Leveraging cloud-based security solutions and backup services can further enhance protection, ensuring data integrity and availability. Implementing disaster recovery as a service (DRaaS), regular backups, and secure storage solutions helps organizations maintain business continuity and minimize downtime. By adopting these best practices, organizations can confidently operate in secondary markets, knowing their critical data and systems are secure and resilient.

Flexential secondary market data centers

Flexential is a leader in the regional data center market, offering scalable, reliable data center services that meet the mounting demands of enterprises and hyperscale cloud providers, driven by its ongoing path to exponential growth and innovation. With an aggressive national growth strategy, Flexential is driving expansion to support the deployment of two data centers—primary and secondary—for redundancy, fault tolerance, and business continuity. This expansion supplements its current capacity in the secondary market, adding 33 megawatts (MW) of critical power in 2022 to bring its national portfolio footprint to more than 3 million square feet and its overall capacity to 310MW across its fleet of 40+ data centers in 18 markets.

Leveraging the FlexAnywhere® Platform and Flexential Interconnection, enterprises can gain access to a full suite of colocation, interconnection, cloud, data protection, and managed and professional services to support their evolving IT and business needs everywhere by prioritizing flexible, high-capacity, and secure data center solutions.

Atlanta

With three Atlanta facilities, Flexential offers a 380,000+ square-foot data center footprint and 30.5+ MW of total power capacity. These facilities serve as lower-cost alternatives to Northern Virginia deployments, offering proximity to hyperscalers and other enterprises with which many organizations are already doing business. The region also offers data center tax incentives, some of which apply to data center customers. Its newest facility, Atlanta – Douglasville, utilizes the Flexential water-free design and offers low power usage effectiveness (PUE) for improved sustainability and IT operations.

Hillsboro

Flexential currently operates five data centers in the Hillsboro/Portland, OR region, with plans for a sixth deployment underway. The Hillsboro data centers offer proximity to Silicon Valley and other expensive West Coast locations. The connectivity-rich area also offers low-latency connectivity to Azure, Google Cloud, and Amazon on the West Coast as well as subsea cabling that connects the region to Asia and beyond. A series of tax advantages, including no state sales tax and the Hillsboro Enterprise Zone, which offers qualified customers a rebate on the cost of IT equipment, offer additional value.

Minneapolis

The Flexential Minneapolis – Chaska data center offers a 160,000+ square-foot data center footprint and 9+MW of critical power. The facility is designed to be concurrently maintainable and fault-tolerant. Minnesota's colder climate allows the facility to utilize outside cold air to regulate data center temperatures for added cost savings. Minneapolis's central U.S. location also makes it ideal for servicing both Coasts. Additionally, the region offers data center-attracting tax abatements that may extend to colocation customers.

Nashville

Flexential is one of the largest multi-tenant data center operators in Tennessee. Its Nashville presence integrates three data centers for a combined 174,000+ square-foot data center footprint and 10.6+MW of critical capacity. Nashville’s low cost of living and energy are major draws to the market.

As businesses continue to leverage technology to meet corporate objectives and support a more distributed workforce and edge requirements, secondary data center markets will become increasingly powerful alternatives to core data center markets. Ongoing research and technological innovation continue to shape the evolution and optimization of secondary data center markets. These strategic deployments will continue to help organizations meet intensifying demands, minimize latency and ensure application performance—all at a lower cost point and with greater scalability than primary markets.

Reach out for a Flexential regional data center tour or learn more here.