According to CBRE's latest Future Cities Brief, demand for data centers accelerated throughout the New York Tri-State region primarily due to an insatiable appetite for information and real-time access to data by the financial services sector.
With data center vacancy hitting an all-time low of 12.1%, developers are expanding inventory with 38.8 megawatts (MW) under construction - most of which has already been pre-leased.
"The New York Tri-State area is well-positioned to meet demand for data centers given its proximity to a critical mass of connectivity," said Robert Meyers, a Senior Vice President in the CBRE Data Center Solutions Group. "Financial services companies, which are one of the most location-dependent industries in the market, are the most active in leasing data center space throughout the region."
According to the CBRE report, the market experienced 6.0 MW of net absorption in H1 2021 with a total inventory of 160.6 MW (112.3 MW in Central New Jersey; 65.3 MW in Northern New Jersey; 14.35 MW in Manhattan; and 6.75 MW in Connecticut). The price of kW per hour was $0.085 to $0.0975, a high cost compared to $0.057 to $0.063-per-kW in Northern Virginia, the largest data center market in the U.S (1,000kW = 1 MW).
"The New York Tri-State region is the seventh-largest data center market in the nation and has the fifth highest total of space under construction among the 17 U.S. markets we track," notes Nicole LaRusso, Senior Director of CBRE Research and Analysis. "We anticipate robust demand for data center space by financial services firms, content distribution networks and e-commerce companies, among others, to be the impetus for the development of more data centers whenever developers can assemble the appropriate sites."