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New York Tri-State Sees Fifth-Most Data Center Leasing in U.S.

Driven by demand from large cloud operators and the financial vertical, the New York Tri-State region saw the fifth-most data center leasing activity in the U.S. in H1 2019, according to CBRE’s latest U.S. Data Center Trends Report.

New York tri-state saw a near-record 6.3 megawatts (MW) of net absorption in H1, up 152% from the same period a year earlier. With 2.4 MW of new capacity added during the first half of the year, the vacancy rate was down at 12% as  the market saw a few large deals completed. Vacancy in tri-state is the fourth lowest in the country, behind Northern Virginia and Silicon Valley even as the first new supply to the market in recent quarters added more than 2 MW of preleased capacity. Transactions in the New York tri-state region are driven by financial companies focusing on high-performance compute and expansion.

“Providers remain optimistic on data center leasing in the Tri-State region due in large part to the diversity of connectivity and population densities,” said Jon Meisel, senior vice president for CBRE’s Data Center Solutions Group.

CBRE first vice president William Hassan added, “As the blend of retail and wholesale deployments evolves, providers continue to offer flexibility and agility for customers through unique partnerships with cloud enablement and managed-service companies. We expect to see consistent growth through 2019.”

National Trends

The seven primary U.S. data center markets saw 171 megawatts (MW) of net absorption in H1 2019, nearly 57 percent of 2018’s full-year record. That absorption nearly eclipsed the 200 MW of capacity added in H1. Northern Virginia, the largest data center market in the world, accounted for 74 percent of net absorption in the primary markets.

“Enterprise users have adopted hybrid colocation strategies as they seek more business, real estate and IT agility,” said Pat Lynch, senior managing director, Data Center Solutions, CBRE. “This has led them to seek facilities that offer more than just competitive rental rates, including multi-cloud access and dense connectivity. We expect strong demand for space in facilities with interconnectivity and flexibility to continue, and for providers to adapt their construction plans and deal structures to keep pace with this need.”

Top 10 Most-Active Markets:

Market H1 2019 Absorption Market H1 2019 Absorption
Northern Virginia 126.4 MW Phoenix 6.0 MW
Houston 14.4 MW Southern California 5.8 MW
Silicon Valley 13.7 MW Chicago 4.8 MW
Dallas-Fort Worth 11.2 MW Charlotte/Raleigh 3.2 MW
New York Tri-State 6.3 MW Minneapolis 2.3 MW

Strong demand has resulted in more than 411 MW of capacity under development nationwide, in addition to the nearly 200 MW delivered in H1 2019. Northern Virginia accounts for 60 percent (248.7 MW) of the current construction activity in the primary markets, largely due to large requirements from cloud users.

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