CBRE Report: North American Data Center Market Shatters Leasing Records in 2021

Driven by demand from large cloud service providers and social media companies, North American data center leasing reached record levels in 2021, according to CBRE.

CBRE’s latest North American Data Center Trends Report shows that there was 493.4 megawatts (MW) of net absorption in the seven primary U.S. data center markets in 2021, a 31% increase over 2019’s then-record level, and up 50% from 2020.

Despite a 17% year-over-year increase in primary-market inventory, vacancy fell to just 7.2%. Occupiers in need of data center capacity in markets with low vacancy should see more options in 2022 with 727.6 MW of facilities under construction. However, 44% of this space has been preleased.

“We expect continued strong data center demand from cloud service providers and social media companies in 2022 as these firms race to build out their digital infrastructure to support demand for cloud services and metaverse and other digital communities,” said Pat Lynch, executive managing director, Data Center Solutions, CBRE. “We also anticipate increased appetite for highly connected colocation space from enterprise users, and pricing increases and longer lead times for available capacity in certain markets due to power constraints and supply chain challenges.”

Greater Seattle added 3.5 MW of data center capacity in 2021, now totaling 140.5 MW in inventory. This makes Seattle the 11th-largest data center market in the U.S. The region recorded 5.8 MW in net leasing activity in 2021 and has an additional 22 MW under construction.

“The Puget Sound region ranked as the second-best market for tech talent in North America in 2021 and has seen extraordinary commitments for future job growth by large technology companies, which will in turn drive demand for data center space. The higher connectivity requirements of new technology in urban areas, like what’s being rolled out in AI, facial recognition software, animation, gaming, sports, and 8k TVs, among others, will further increase the need for data centers in the region,” said Jane Blair, first vice president with CBRE’s Data Center Solutions group in Seattle.

Top U.S. Data Center Markets

Northern Virginia remained the most active data center market with net absorption of 303.3 MW in 2021 – more than four times that of Atlanta, the second-most-active market.

Top 10 Most Active Markets

Looking ahead, Northern Virginia has the largest under-construction pipeline, at 239 MW. Other markets with significant construction under way include Hillsboro, Oregon (234.8 MW); Atlanta (160.5 MW); Silicon Valley (94.6 MW); Phoenix (85.5 MW); and Dallas/Ft. Worth (75.8 MW).

To download the report, click here.

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