CBRE Report: Chicago Data Center Pricing Hits Record Highs as Vacancy Hits Record Lows

Record absorption of 226.8 megawatts (MW) of data center space in 2023 resulted in a new all-time low vacancy rate for Chicago, dropping to 2.1% in H2 2023 from 5.5% in H1, according to CBRE’s recent North America Data Center Trends report. The robust demand by financial services operators also affected rental rates, which climbed to $130-$135 kW for a 3-10 MW requirement per month. Even with rising rates, Chicago remains the most affordable primary data center market in the U.S.

“Chicago’s central location, access to power and water, deep labor pool, and state tax incentives continue to generate a high volume of demand from data center developers and cloud providers,” said Jordan Thompson, an Executive Vice President in CBRE’s Chicago office and a member of CBRE’s Data Center Solutions Group. “Looking at the pipeline moving forward, land availability is constrained, which is causing operators to prospect redevelopment opportunities and new submarkets.”

Chicago has a data center construction pipeline of 118 MW, with 109 MW of that space preleased.

Notable activity in Chicago included Phase 1 of CoreSite’s facility being fully leased, NTT acquiring office buildings with plans to demolish them to build data centers, and T5 Data Centers’ plans to build a 36-MW campus in Northlake, Chicago. Compass Datacenters also acquired 193 acres in Hoffman Estates, a former Sears headquarters.

In 2023, national average asking prices rose to $163.44 per kW/month from $137.86 per kW/month (18.6% year-over-year increase) and will likely achieve double-digit growth again in 2024. Meanwhile, supply in the eight primary U.S. data center markets* grew by 26%, totaling 5,174.1 MW, and vacancy remained near a record low at 3.7%.

Data center construction also reached a new high in H2 2023 with 3,077.8 MW under construction in primary markets, a 46% increase from the same time last year (2,109.2 MW). The Chicago market currently has 118 MW of space under construction, with 192.1 MW being delivered in H2 2023.

While supply chain disruptions have eased, construction costs are rising due to ongoing shortages in critical materials like generators, chillers and transformers. That trend is likely to persist throughout the year. Power constraints are creating opportunities for emerging data center markets in Nevada, Indiana and Wisconsin to host large data center facilities.

Top Data Center Markets

Northern Virginia remained the most active data center market in H2 2023 with 1,237 MW of construction and 424.4 MW of total absorption for the year. Prices also rose significantly to $150-$190 per kW/month from $100-$140 per kW/month (42% year-over-year increase). However, Phoenix led U.S. data center markets in average asking rates at $170 - $200 per kW/month.

Other notable markets include Atlanta, which saw a surge in building with 732.6 MW under construction – a 211% increase since H1 2023 (235.6 MW) and 388% increase from H2 2022 (150 MW). Dallas/Fort Worth reported strong preleasing activity, with 90% of capacity/space under construction (118 MW) already pre-leased.

To view the full report, click here.

*The eight primary U.S. data center markets are Northern Virginia, Dallas/Fort Worth, Silicon Valley, Chicago, Phoenix, New York Tri-State, Atlanta and Hillsboro.