Data Center Vacancy Hits All-Time Low in Tri-State Area as Demand Grows: Report
By Celia Young October 25, 2022 5:13 pm
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Data servers aren’t just warm to the touch — the market to store them is red hot.
The tri-state area’s data center vacancy rate hit an all-time low of 9 percent in the first half of 2022 as demand for space continues to grow, according to CBRE (CBRE)’s North America data center report.
Net absorption of data center space in the first half of the year hit 16 megawatts — a unit of power measuring a data center’s size instead of square feet. That’s 10 megawatts higher than the same period last year, highlighting the incredible demand for data storage from firms, particularly in the financial services sector, said Robert Meyers, CBRE’s senior vice president of data centers solutions.
“It’s really on fire,” Meyers said. “Information itself continues to compound. All enterprise organizations are becoming more efficient in their ability to access data for their businesses.”
Meyers expected companies’ desire for data storage to go nowhere but up. Businesses increasingly rely on data to operate, and off-site data centers offer protection from servers overheating and provide backup power in case of an electrical outage — something not often found in every commercial office, Meyers said.
“Information growth is not slowing down whatsoever,” Meyers said. “People are recognizing that the cost of failure for a business, and the cost of an outage, is almost incalculable.”
Meanwhile, builders in New York and New Jersey are rapidly trying to catch up to the demand. Data center construction in the tri-state area hit a 10-year high of 67 megawatts in the first half of 2022 compared to 38.1 megawatts in the same period last year, in part driven by companies’ increased desire for security, according to the study.
New York wasn’t alone in the trend. Nationally, the data center vacancy rate hit a historic low of 3.8 percent in the first half of the year across the seven markets CBRE studied, down from 10.3 percent in the first half of 2021, according to the report. At the same time, those U.S. markets added 352.9 megawatts of new supply, a 20 percent increase from the previous year.
Northern Virginia kept its crown as the fastest-growing market for data centers, with a whopping 837 megawatts under construction in the first half of 2022 — a 188 percent increase year-over-year. Electricity in the region also costs less than in states like New York, making centers cheaper to operate, according to the report.
Celia Young can be reached at cyoung@commercialobserver.com.
