North American data centre leasing rises to record levels in 2022

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North American data centre leasing reached record levels and vacancy fell to a record low in 2022 according to CBRE.

The CBRE 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-on-year to US$137.90 per kW, the first year-on-year increase in pricing since 2017.

The seven US data centre markets logged 686.9MW of net absorption, up nearly 40% year-on-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 the second half of 2022.

“Data centre 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 and global head of advisory and transaction services, data centre solutions at CBRE.

“Demand from enterprise users and cloud service providers remains very strong, particularly as companies continue to adopt hybrid work strategies and prioritise private cloud networks.”

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

The region accounted for 65% of new primary-market supply delivered in 2022.

Other markets with notable supply growth included Silicon Valley (66MW), Hillsboro, Oregon (59MW) and Toronto (44MW).