Financial Services Drives Increase in New York Data Center Leasing

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The financial services sector might have been overtaken by tech as New York City’s biggest driver of leasing activity, but it still dominates data center activity, a new report from CBRE found.

The New York tri-state area saw 6 megawatts — a unit of power used to measure data center sizes instead of square feet — of net absorption of data center space in the first half of 2021, 3 megawatts higher than 2020’s total, the report found. Financial services were the major driver of that activity, though CBRE could not say how much it leased in the first half of the year.

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Because of the strong leasing activity, the vacancy rate for data centers fell to 12.1 percent in the first half of 2021, CBRE found.

But the tri-state region is expected to see a surge in new construction of data centers, with 38.1 megawatts expected to be added to the area 160.6 megawatts total, the report said.

“The price of data center power per kilowatt has remained stable in the tri-state region, mostly due to the historic cost-of-build compression and ingrained build efficiencies,” Jon Meisel, data center broker for CBRE, said in a statement. “However, the market should keep a close eye on whether new supply will affect pricing in the future.”

And while the area’s expected to see a large increase of data center space, it still only represents about 5 percent of the country’s total market inventory, according to CBRE.

Northern Virginia remained the top data center market in the world, with 1.5 billion megawatts, but net absorption dropped year over year, the report found.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.