Primary Market: Silicon Valley

Colocation Insights

• Cloud service providers continue to dominate, although the area has seen a resurgence of enterprise demand.
• Limited land and ability to deliver power has led some providers to neighboring areas like San Jose & the East Bay.

Market Trends

• The city of Santa Clara’s power utility Silicon Valley Power is constrained.
• Developers are buying remaining sites with long-term investment intentions, and land banking for the near-term to wait for power delivery.
• Transmission substation sites can’t be energized until 2028-2029.
• The vacancy rate has risen 2.3%. Increases in vacancy can be attributed to consolidation from second-generation space, and a shift to cloud.

Notable Activity

• NTT/RaginWire SV1 is now 100% leased.
• GI Partners, EdgeCore and CyrusOne each announced new developments beginning this or next year.
• Projects under construction in Santa Clara:
  • 435,050-sq.-ft. 48-MW data center by Digital Realty
  • 121,000-sq.-ft. 9-MW facility by Prime Data Centers
  • 560,000-sq.-ft. 60-MW building by Skybox Data Centers
  • 450,000 -sq. ft. 32-MW facility by Vantage Data Centers.
• Digital Realty is targeting delivery of the first 8 MW at 641 Walsh Ave in Q1 2024

Figure 1: Historical Market Information

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 2: Historical Supply and Demand

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 3: % of Total Primary Market Inventory

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 4: Market Fuel Mix

Source: Silicon Valley Power.

Figure 5: Average Asking Rates

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.