Real Estate News
U.S. Data Centers Enjoy Record Setting Leasing Year in 2018

U.S. Data Centers Enjoy Record Setting Leasing Year in 2018

Northern Virginia Accounts for 58% of U.S. Absorption in Primary Data Center Markets

According to CBRE's latest U.S. Data Center Trends Report, demand from large cloud users drove U.S. data center leasing to record levels in 2018, providing momentum for new construction in the sector this year.

The seven primary U.S. data center markets saw 303 megawatts (MW) of net absorption in 2018, up more than 16 percent from 2017's then-record total. That absorption nearly eclipsed the 322 MW of capacity added last year. Northern Virginia, the largest data center market in the world, accounted for 58 percent of net absorption in the primary markets. 

"We are closely watching supply and demand trends across the U.S. data center market in 2019 and beyond, particularly as data consumption--driven by the adoption of big-data analytics, 5G, gaming, streaming services, edge computing and the internet of things--continues to drive growth," said Pat Lynch, senior managing director, Data Center Solutions, CBRE. "Meanwhile, we've seen robust construction activity as operators try to position themselves to rapidly deliver facilities within users' often-tight schedules."

Top U.S. Data Center Markets

Northern Virginia remained the most active data center market, with net absorption of 175.5 MW in 2018.

Strong demand has resulted in more than 500 MW of capacity under development in the primary U.S. markets, up significantly from the 228 MW underway at the end of 2017. Northern Virginia accounts for two-thirds of the current construction activity, primarily due to large requirements from cloud users. With 336.9 MW under construction, Northern Virginia's pipeline is larger than the existing inventory of any U.S. data center market.

Other markets with significant construction activity include Phoenix, with 71.4 MW under construction at year end; Dallas-Fort Worth (37.4 MW); Houston (23 MW) and Atlanta (20.9 MW).

WPJ News | Top 10 Most-Active U.S. Data Center Markets

U.S. Capital Investment Trends

North American data center investment volume reached $12 billion in 2018, inclusive of single-asset, portfolio and entity-level transactions. While investment was down from 2017's record-setting $20 billion, this was largely due to limited North American entity-level investment opportunities compared to 2017. 

Not included in the investment-volume figures are land transactions earmarked for data-center development. Land acquisition and land banking can play a significant role in various markets, given that Atlanta, Houston and Phoenix offer numerous developable lots, but land is scarce and expensive in other data center hubs like Northern Virginia and Silicon Valley.

"The data center market will continue to evolve and adapt to the demands of today and tomorrow," Mr. Lynch added. "We expect to see a continued influx of capital into the sector from new investors and infrastructure funds seeking to diversify their portfolios, as well as increased investment and expansion in global regions previously untapped by providers and cloud users."

Sponsored by

Comment with Facebook

Copyright 2010 - 2019 WORLD PROPERTY JOURNAL, INC. All Rights Reserved.

Join 34,000+ real estate professionals worldwide who receive our free weekly newsletter

News Search

Listing of The Day

Luxury Property Spotlight

Reader Poll

Featured International Listings
Free News Alerts

Sign up now to receive the latest local & global real estate news in your inbox.