Commercial News » New York City Edition | By Michael Gerrity | March 13, 2023 8:53 AM ET
According to a new report from CBRE, activity from financial services companies drove data center leasing in the New York Tri-State region in 2022. The region recorded 18.1 MW of data center space leased in 2022, more than 70% increase compared to 2021.
"Demand by financial services companies continued unabated during the second half of last year and in many cases the recession was the impetus for the surge in outsourcing to third party colocation service providers, as more companies looked to divest from owning on-premises equipment," said Robert Meyers, Senior Vice President for the CBRE Data Center Solutions Group. "During the second half of the year, the vacancy rate dropped to just 7.8%, a significant decline from the 9% the market saw during the first half of 2022. This has left many big players with very limited space options."
According to the CBRE report, 105.4 MW of capacity is under construction in the Tri-State region, marking an unprecedented increase in construction volume. Notable activity includes the expected delivery of 9 MW of capacity in Piscataway, NJ by QTS and CoreSite's purchase of 215 County Avenue in Secaucus for $62.5 million in addition to expansion projects currently underway on the Equinix campus in Secaucus.
CBRE's latest North American Data Center Trends Report found that tight market conditions and escalating energy and construction costs caused primary-market average asking rents to increase 14.5% year-over-year to $137.90 per kW, the first year-over-year increase in pricing since 2017.
The seven primary U.S. data center markets* logged 686.9 megawatts (MW) of net absorption, up nearly 40% year-over-year. Despite a 17% increase in supply, vacancy fell to a record-low 3.2%. Two-thirds of the net absorption occurred in the first half of the year, as power and land constraints in certain markets, as well as construction delays, weighed on activity in H2 2022.