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LA’s Data Center Supply Crunch
dot.LA Weekly Update
Christine Rothacker
September 06, 2024
🔦 Spotlight
Happy Friday Los Angeles!
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The Los Angeles data center market is experiencing a significant supply crunch, ranking 12th in growth among top markets since 2020 with only 265 megawatts of colocation inventory (data centers where businesses rent space to store their computing hardware and servers). Despite this, demand is surging, driven by AI, cloud, and hyperscaler needs, with AI accounting for 20% of new data center demand nationally. This scarcity is creating a highly competitive environment, with vacancy rates at a record low 3% and asking rents rising 13-37% year-over-year. For Los Angeles, this presents both challenges and opportunities in the big picture. The city's strategic position as a global entertainment hub and its connectivity to international markets through subsea cables make it an attractive location for data centers. However, the limited inventory and rising costs could potentially hinder growth and innovation in the tech sector. To maintain its competitive edge, Los Angeles will need to address these constraints through new developments, such as GI Partners' 16 MW addition at One Wilshire, and by focusing on high-connectivity, high-power capacity submarkets. The city's tech community should prepare for a landscape of increased competition for quality data center space, higher costs, and the need for innovative solutions to meet growing demand, particularly in AI and cloud services. While Los Angeles faces a challenging data center supply crunch, its strategic advantages and ongoing developments offer a promising path forward.
🤝 Venture Deals
LA Companies
Linker Finance, a platform for community banks, raised a $3.7M Seed Round co-led by TenOneTen Ventures and Chingona Ventures. - learn more
Daisy, a one-year-old startup that designs and installs smart home and office technology systems, raised a $7M Series B co-led by Goldcrest and Bungalow, with previous investors Bullish and Burst Capital also stepping up. The company has raised a total of $13.3 million. - learn more
LA Venture Funds
Acre Venture Partners and Anthos Capital participated in a $17M Seed Round for Switch Bioworks, a developer of sustainable fertilizers. - learn more
Westlake Village BioPartners participated in a $325 M Series C for Arsenal Biosciences, a South SF-based programmable cell therapy startup. - learn more
Clocktower Ventures participated in a $15M Series A for Ume, a startup whose platform enables SMBs to offer BNPL consumer financing. - learn more
Amplify.LA, an LA-focused pre-seed firm, is raising up to $60m for its sixth fund. - learn more
Slauson & Co., a venture firm focused on "economic inclusion," raised $100m for its second fund. - learn more
✨ Featured Event ✨
LA’s tech leadership is set to reunite after a long break! This two-day summit will focus on building strong connections, sharing insights, and fortifying the local tech community.
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