New data centers can’t be built fast enough

Despite a huge increase in supply in the North American data center market in the first half of 2022, the latest North American Data Center Report found that the overall vacancy rate fell to an all-time high thanks to increased demand from major cloud service providers, social media companies and enterprise users.

In the seven major data center markets, the percentage of new megawatts coming online increased by 20% over the previous year. As heavy cloud users rushed to secure space to handle planned future development, data center vacancy rates fell to an average of 3.8% across the seven major markets in the first six months of 2022, compared to 10.3% in the first six months of 2021. The report also explained that the tight market conditions led to an increase in average asking rents in the primary markets (an increase of 5.9% totaling 127 $.50 per kW) and secondary markets (a 2.3% increase totaling $133.00 per kW) for the first time since 2017.

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Much of the market growth can be attributed to rampant pre-leasing activity following the pandemic-induced economic turmoil. A spike in pre-lease activity resulted from fears that supply chain disruptions would limit capacity expansion, and large hyperscalers have been actively booking space to support expected growth over the past few years. next five years. So, even if new data centers are created, the market is expected to remain tight, at least for the foreseeable future.

Ramon J. Espinoza