Central Texas Data Center Market Vacancy Dropped to Record Low in 2021

The vacancy rate of the Austin/San Antonio data center market fell to an all-time low as North American data center leasing reached record levels in 2021, according to a new report from CBRE.

The Central Texas data center market finished the year with the second-tightest supply among the 17 North American markets CBRE tracks. Demand from cloud services providers and social media companies drove the market’s vacancy rate down 30 basis points last year to 2.5 percent.

Despite low vacancy, inventory only grew by 2.7 percent year-over-year to 150.6 megawatts (MW) in Central Texas, which remained the largest secondary market in North America in 2021. With limited inventory available, the market’s leasing activity decreased by 37 percent to 4.3 MW of net absorption.

This year, Central Texas leasing activity should improve because of increasing construction activity, with 100 percent of new construction preleased. The market had 29 MW of space under construction at year-end in 2021 – more than twice the 2020 total of 14 MW. The market’s tech growth, including its expansion as a hub for transportation innovation, is expected to drive future demand for digital infrastructure in the region.

“The Austin and San Antonio data center markets remain incredibly supply-constrained with very low vacancy across the market,” said Brant Bernet, Senior Vice President, Data Center Solutions, CBRE. “New operators have recently purchased land in the Austin market with other providers looking to capitalize on the accelerating demand from the tech sector, which includes the electric and autonomous vehicle manufacturing corridor expanding rapidly along I-35.”

National Trends

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

Despite a 17 percent year-over-year increase in primary-market inventory, vacancy fell to just 7.2 percent 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 percent of this space has been preleased.

“We expect continued strong data center demand from cloud service providers and social media companies in 2022, particularly for large-scale, single-tenant facilities, as these firms race to build out metaverse and other digital communities,” said Pat Lynch, Executive Managing Director, Data Center Solutions, CBRE. “The continued adoption of autonomous vehicles, 5G infrastructure, and blockchain technology will also further fuel the data center real estate market in 2022 and beyond.”

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.