COVID Driven Remote Working, Video Conferencing Explosion Fueled U.S. Data Center Growth

COVID Driven Remote Working, Video Conferencing Explosion Fueled U.S. Data Center Growth

Commercial News » Dallas Edition | By Michael Gerrity | March 15, 2021 8:20 AM ET

According to CBRE research, data centers were one of the fastest growing commercial real estate sectors in 2020, as businesses nationwide reconfigured their digital infrastructure for remote work capabilities, coupled with tech giants and cloud service providers race to meet consumer and corporate demand.

CBRE's latest North American Data Center Trends Report shows 329.6 megawatts (MW) of net absorption in 2020 across the seven primary U.S. data center markets. While down 11 percent from the peak in 2019, 2020 absorption was still higher than any other year on record. Meanwhile, vacancy fell to just 8.5 percent, despite an 11 percent growth in new supply.

"With data usage growing at an explosive rate, we expect data center demand to increase across both primary and secondary markets in 2021," said Pat Lynch, Senior Managing Director, Data Center Solutions, CBRE. "To capitalize on this growth, data center providers will look to deliver network and interconnection offerings to better connect business-critical applications, as well as to meet anticipated demand for evolving technologies like 5G, Edge computing and the internet of things--all of which will further fuel the data center real estate market."

Top North American Data Center Markets

Northern Virginia remained the most active data center market, with net absorption of 217.2 MW in 2020. Strong demand and an uptick in investor interest in direct investment due to the strong performance of data center REITs in 2020 resulted in a 457.8-MW data center construction pipeline in the primary markets, up 62 percent from the end of 2019. More than half of the current pipeline is pre-leased. Northern Virginia accounts for more than 60 percent (283.5 MW) of the construction pipeline in the primary markets.

Other markets with significant construction pipelines include Montreal (57 MW), Silicon Valley (50.1 MW), Central Washington (43.7 MW), Hillsboro, Oregon (40.5 MW), and Chicago (33.7 MW).


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