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Northern Virginia dubbed most attractive data centre market says CBRE

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Data centres remained one of the fastest growing real estate sectors in 2020 as businesses reconfigured their digital infrastructure to improve their remote work capabilities, and tech giants and cloud service providers raced to meet consumer and corporate demand, according to CBRE.

The firm’s latest North American Data Centre Trends Report shows 329.6MW of net absorption in 2020 across the seven primary U.S. data centre markets.

While down 11% from the peak in 2019, 2020 absorption was still higher than any other year on record. Meanwhile, vacancy fell to just 8.5%, despite an 11% growth in new supply.

“With data usage growing at an explosive rate, we expect data centre demand to increase across both primary and secondary markets in 2021,” said Pat Lynch, Senior Managing Director, Data Centre Solutions, CBRE.

“To capitalise on this growth, data centre providers will look to deliver network and interconnection offerings to better connect business-critical applications, as well as to meet anticipated demand for evolving technologies like 5G, Edge computing and the internet of things—all of which will further fuel the data centre real estate market.”

Northern Virginia remained the most active data centre market, with net absorption of 217.2MW in 2020.

CBRE found that strong demand and an uptick in investor interest in direct investment due to the strong performance of data centre REITs in 2020 resulted in a 457.8MW data centre construction pipeline in the primary markets, up 62% from the end of 2019.

More than half of the current pipeline is pre-leased. Northern Virginia accounts for more than 60% (283.5MW) of the construction pipeline in the primary markets.

Other markets with significant construction pipelines include Montreal (57MW), Silicon Valley (50.1MW), Central Washington (43.7 MW), Hillsboro, Oregon (40.5 MW), and Chicago (33.7 MW).

Elsewhere, the global real estate advisor has bolstered its Data Centre Solutions (DCS) team with five new hires spanning its research, site transactions and capital markets capabilities.

Director Hugo Jack, Associate Director Katie Hoggarth and Senior Surveyor Chris Jones all join the DCS Site Transactions team, whilst Associate Director Oscar Matthews joins DCS Capital Markets and Graduate Henry Gray joins DCS Research. All five hires join the team from JLL.

“Across EMEA we have seen a phenomenal increase in the demand for data centres, principally driven by cloud companies,” said Andrew Jay, Head of EMEA Data Centre Solutions at CBRE.

“In line with client demand, we are continuing to grow our Data Centres team across all functions. All five new hires bring with them a wealth of experience which will be invaluable in order to maintain and bolster our position as the market leader in this field.”

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