Washington, D.C.
Northern Virginia Data Center Rents Climb as Vacancy Rates Remain Near All Time Low
AI Operators and Public Cloud Provides Dominate Leasing
March 20, 2024
Media Contact
Casey Davison
Corporate Communications, Midwest
Northern Virginia was 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, according to CBRE’s recent North America Data Center Trends report. As a result, prices for traditional wholesale-sized footprints in Northern Virginia climbed to $120-140 per kW/month from $90-$110 per kW/month (30% year-over-year increase) while the vacancy rate remained at 1.40%.
“During the second half of the year, public cloud providers and AI operators were the dominant force in leasing, taking the majority of the space available in the market,” said Jamie Jelinek, CBRE Executive Vice President. “Due to increased demand, lack of available space and higher capital costs, developers were hampered in providing additional supply.”
According to the CBRE report, hyperscalers remained focused on large campus deployments to accommodate future growth. However, tenants are committing to leases well before construction to ensure capacity needs are met with 1,032 MW of the 1,237 MW construction pipeline preleased.
Notable activity in Northern Virginia during H2 2023 includes the progress made by Dominion Energy in its transmission line projects that is expected to bring much needed capacity in 2026; Yondr Group’s delivery of its first building in the market; the approval of rezoning for the PW Digital Gateway, which contains 2,000 acres for future development, by the Prince William Board of County Supervisors; and the completion of two new data centers by PowerHouse Data Centers and Cologix, respectively.
National Trends
Chicago continues to experience low vacancy at 2.1%. 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.
“During the second half of the year, public cloud providers and AI operators were the dominant force in leasing, taking the majority of the space available in the market,” said Jamie Jelinek, CBRE Executive Vice President. “Due to increased demand, lack of available space and higher capital costs, developers were hampered in providing additional supply.”
According to the CBRE report, hyperscalers remained focused on large campus deployments to accommodate future growth. However, tenants are committing to leases well before construction to ensure capacity needs are met with 1,032 MW of the 1,237 MW construction pipeline preleased.
Notable activity in Northern Virginia during H2 2023 includes the progress made by Dominion Energy in its transmission line projects that is expected to bring much needed capacity in 2026; Yondr Group’s delivery of its first building in the market; the approval of rezoning for the PW Digital Gateway, which contains 2,000 acres for future development, by the Prince William Board of County Supervisors; and the completion of two new data centers by PowerHouse Data Centers and Cologix, respectively.
National Trends
Chicago continues to experience low vacancy at 2.1%. 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.