Cloud service providers joined the financial services sector as the two major players in the data center market throughout New Jersey in H2 2021, according to CBRE’s North America Data Center Trends report. Robust demand and lack of supply brought the market’s overall vacancy rate to an all-time low and was the impetus for major operators such as Coresite, CyrusOne, Sabey and QTS to add supply.
According to the CBRE report, the market experienced 10.5 MW of net absorption in 2021 with a total inventory of 160.6 MW. Activity during H2 2021 was almost 100% comprised of expansions by existing data center tenants. Among the most notable deals was a lease by a hyperscale firm at QTS’ Piscataway campus, while Nasdaq has partnered with one of the nation’s largest cloud providers within an Equinix-owned data center in Carteret, NJ.
“The data center sector is well positioned for the future,” said Bill Hassan, a senior vice president in the Saddle Brook office of CBRE. “However, new data center supply currently under construction could begin to affect asking rents, which have remained relatively stable despite a low vacancy rate.”
According to the CBRE report, the price of kW-per hour held steady at $0.085 to $0.0975 in H2 2002, with 34 MW of new data center supply under construction. Among the development activity in New Jersey was 600,000 sq. ft. being delivered by Digital Realty in its two-building campus in Totowa. The operator is also seeking approvals to develop an additional floor in the second budging to meet demand.
“While demand by financial services companies continued to drive the market, cloud service providers were also major players in Q4 2021, taking advantage of New Jersey’s proximity to a critical mass of connectivity,” added Jon Meisel of CBRE.
CBRE’s latest North American Data Center Trends Report shows that there was 493.4 megawatts (MW) of net absorption in the seven primary U.S. data center markets in 2021, a 31% increase over 2019’s then-record level, and up 50% from 2020.
Despite a 17% year-over-year increase in primary-market inventory, vacancy fell to just 7.2%. Occupiers in need of data center capacity in markets with low vacancy should see more options in 2022 with 727.6 MW of facilities under construction. However, 44% of this space has been preleased.
“We expect continued strong data center demand from cloud service providers and social media companies in 2022, particularly for large-scale, single-tenant facilities, as these firms race to build out metaverse and other digital communities,” said Pat Lynch, Executive Managing Director, Data Center Solutions, CBRE. “The continued adoption of autonomous vehicles, 5G infrastructure, and blockchain technology will also further fuel the data center real estate market in 2022 and beyond.”
Northern Virginia remained the most active data center market with net absorption of 303.3 MW in 2021 – more than four times that of Atlanta, the second-most-active market.
|Market||2021 Net Absorption||Market||2021 Net Absorption|
|Northern Virginia||303.3 MW||Silicon Valley||23.3 MW|
|Atlanta||70.4 MW||Hillsboro||21.2 MW|
|Phoenix||29.8 MW||New York Tri-State||10.5 MW|
|Dallas/Ft. Worth||28.6 MW||Denver||8.0 MW|
|Chicago||27.4 MW||Southern California||7.7 MW|
Looking ahead, Northern Virginia has the largest under-construction pipeline, at 239 MW. Other markets with significant construction under way include Hillsboro, Oregon (234.8 MW); Atlanta (160.5 MW); Silicon Valley (94.6 MW); Phoenix (85.5 MW); and Dallas/Ft. Worth (75.8 MW).
To access more business news, visit NJB News Now.Related Articles: