Central Texas Data Center Vacancy Falls to Second Lowest in the U.S. in 2022

During another strong year for data center leasing activity, the Austin/San Antonio market became the second tightest market for vacancy in the U.S., according to a new report from CBRE.

Just 1.3% of Central Texas’s 154.7 MW of data center inventory remained vacant at the end of 2022, an all-time low, ranking it only behind Northern Virginia (NoVa) for tightest market in the country. For comparison, Austin/San Antonio’s vacancy was 2.54% to end 2021. The market recorded 6 MW of absorption. Just 4.1 MW of inventory was delivered in 2022.

While hardly any space remains vacant in Central Texas, developers are responding to the market’s growing need for data center product. 85.5 MW is currently under construction across the region, with a majority (78 MW) being built in San Antonio. The Alamo City remains the region’s largest data center market by inventory with 92.4 MW of space. Austin is home to 62.3 MW of data center space and only 7.5 MW is currently under construction.

“As land availability has been gobbled up in other parts of the state, especially in the DFW area, data center operators are now looking more at Central Texas, particularly the Austin suburbs, as a logical place to find large, available land sites with abundant power," said Chris Herrmann, senior vice president with CBRE’s Data Center Solutions group. "We expect that the record low vacancy rates should be alleviated as the product under construction in both Austin and San Antonio is delivered in late 2023 and early 2024.”

National Trends

CBRE’s latest North American Data Center Trends Report found that tight market conditions and escalating energy and construction costs caused primary-market average asking rents to increase 14.5% year-over-year to $137.90 per kW, the first year-over-year increase in pricing since 2017.

The seven primary U.S. data center markets* logged 686.9 megawatts (MW) of net absorption, up nearly 40% year-over-year. Despite a 17% increase in supply, vacancy fell to a record-low 3.2%. Two-thirds of the net absorption occurred in the first half of the year, as power and land constraints in certain markets, as well as construction delays, weighed on activity in H2 2022.

“Data center leasing slowed in the second half of 2022, but this was driven purely by a lack of available space and power constraints,” said Pat Lynch, Executive Managing Director, Global Head of Advisory & Transaction Services, Data Center Solutions, CBRE. “Demand from enterprise users and cloud service providers remains very strong, particularly as companies continue to adopt hybrid work strategies and prioritize private cloud networks.”

Top Data Center Markets

Northern Virginia remained the most active data center market with net absorption of 436.9 MW, with the market’s vacancy rate falling to under 1%, despite significant power constraints.

                                     Top 10 Tightest Data Center Markets

Northern Virginia (371.5 MW) accounted for 65% of new primary-market supply delivered in 2022. Other markets with notable supply growth included Silicon Valley (66.0 MW), Hillsboro, Ore. (59.0 MW), Toronto (44.0 MW) and Phoenix (37.5 MW).

To view the full 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.