Tier 2 Markets: Why Oslo, Milan, and Columbus are the new Ashburn
With FLAP and Northern Virginia saturated, smart capital is moving to locations with abundant power and favorable ambient cooling conditions.
Global Scale Research
Data Center Alley in Ashburn, Virginia, processes an estimated 70% of the world's internet traffic. It is also full. Dominion Energy has signaled severe power constraints. In Europe, the FLAP markets (Frankfurt, London, Amsterdam, Paris) face similar issues: moratoriums on new builds, impossibly long grid queues, and sky-high power prices.
But AI training workloads are unique. Unlike high-frequency trading or content delivery, they are not strictly latency-sensitive to the end user. If a model takes 3 months to train, it doesn't matter if that happens 5ms or 50ms away from the user. This has triggered a "Great Migration" to Tier 2 markets.
The Nordics: Oslo, Stockholm, Helsinki
The Nordics offer the holy grail for AI: cheap, green, stable power. Hydroelectricity is abundant. Furthermore, the climate allows for "Free Cooling" (using outside air to chill the water loops) for 10-11 months of the year. This drastically lowers OpEx and PUE.
The US Midwest: Columbus & Des Moines
Ohio (Columbus) and Iowa (Des Moines) have become the quiet giants of the US market. Land is inexpensive, the grid is relatively robust (though tightening), and fiber connectivity is excellent due to longstanding hyperscale investment (Facebook/Meta, Google). For enterprise colo, these markets offer a 30-40% discount on Total Cost of Ownership (TCO) compared to Ashburn or Silicon Valley.
Southern Europe: Milan, Madrid, Zaragoza
As gateways to Africa and the Middle East, these cities are absorbing the overflow from the saturated FLAP markets. AWS and Microsoft have made massive investments in Spain (Aragon region). The solar potential here also aligns well with green energy goals, provided battery storage is part of the mix.