Commercial Real Estate News
Metaverse, Cloud Services Demand Drives Historic Data Center Leasing in 2021
Global property consultant CBRE is reporting the demand from large cloud service providers and social media companies; North American data center leasing reached record levels in 2021.
CBRE's latest North American Data Center Trends Report shows that there was 493.4 megawatts (MW) of net absorption in the seven primary U.S. data center markets in 2021, a 31% increase over 2019's then-record level, and up 50% from 2020.
Despite a 17% year-over-year increase in primary-market inventory, vacancy fell to just 7.2%. Occupiers in need of data center capacity in markets with low vacancy should see more options in 2022 with 727.6 MW of facilities under construction. However, 44% of this space has been preleased.
"We expect continued strong data center demand from cloud service providers and social media companies in 2022 as these firms race to build out their digital infrastructure to support demand for cloud services and metaverse and other digital communities," said Pat Lynch, Executive Managing Director, Data Center Solutions, CBRE. "We also anticipate increased appetite for highly connected colocation space from enterprise users, and pricing increases and longer lead times for available capacity in certain markets due to power constraints and supply chain challenges."
Top North American Data Center Markets
Northern Virginia remained the most active data center market with net absorption of 303.3 MW in 2021 -- more than four times that of Atlanta, the second-most-active market.
Looking ahead, Northern Virginia has the largest under-construction pipeline, at 239 MW. Other markets with significant construction under way include Hillsboro, Oregon (234.8 MW); Atlanta (160.5 MW); Silicon Valley (94.6 MW); Phoenix (85.5 MW); and Dallas/Ft. Worth (75.8 MW).
