The insatiable demand for data center space has caused the vacancy rate in the New York Tri-State to reach an all-time low of 9.0% in H1 2022, according to CBRE’s most recent North America Data Center Trends Report.
The leasing activity on the market continued to be dominated by the financial services industry, which enabled net absorption to reach 16.0 MW in the first half of the year. Major data center operators are increasing supply quickly to keep up with the strong demand; in H1 2022, under-construction activity reached a 10-year high of 67 MW.
statewide patterns
In the seven major U.S. data center markets*, 352.9 megawatts (MW) of new supply went online in the first half of 2022, a 20 percent increase year over year, according to CBRE’s most recent North American Data Center Trends Report.
Despite the increase in capacity, significant cloud customers rushed to secure space to support projected future development, and data center vacancy declined to an average of 3.8 percent across the seven primary markets in H1 2022 from 10.3 percent in H1 2021. The significant decline in vacancy was partly caused by the significant release of space that had been under development in earlier years.
The average asking rent increased in both primary markets (5.9 percent to $127.50 per kW) and secondary markets (2.3 percent to $133.00 per kW) for the first time since tight market circumstances began in 2017. As of the end of H1 2022, 73 percent (1,170 MW) of the 1,601.5 MW of the supply that was under construction had been released, so primary-market vacancy will likely remain low for some time.
Leading American Data Center Markets
With net absorption of 269.3 MW, a 281 percent increase from H1 2021, Northern Virginia continued to be the most active data center area. It was more than four times as busy as Silicon Valley, which was the next-highest market. In the first half of 2022, net absorption across the seven key markets reached 453.4 MW, almost double that of the prior half of 2022.
In H1 2022, Northern Virginia (219.5 MW) supplied 62 percent of the new primary market supply. In the first half of the year, other markets with significant supply growth included Silicon Valley (56.0 MW), Phoenix (37.5 MW), Hillsboro, Oregon (30.0 MW), and Atlanta (20.0 MW).
According to CBRE, Northern Virginia, Dallas, Silicon Valley, Chicago, Phoenix, New York Tri-State, and Atlanta are the seven most important U.S. data center markets.
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