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November 15, 2019
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SoCal Sees Seventh-Most Data Center Leasing in U.S. in First Half of 2019

9/05/19

This report was provided by real estate services firm CBRE

Driven primarily by in-market tenant expansions, Southern California experienced the seventh-most data center leasing activity in the U.S. in H1 2019, according to CBRE’s latest U.S. Data Center Trends Report.

Southern California saw 5.8 megawatts (MW) of net absorption in H1, up 38% from the same period a year earlier. The area added 12.3 MW of new capacity during the first half of the year, compared with 8 MW during the same period a year earlier. Due to upcoming market churn, near-term vacancy rates are likely to increase further from the current 20.4%, which was nearly flat compared with the 19.7% in the first half of 2018 but up from the 16.3% vacancy rate in the second half of last year.

“While activity has predominantly consisted of retail colocation transactions, hyperscalers are continuing to show interest in the market, primarily for local market distribution and content,” said Pat Lynch, senior managing director, Data Center Solutions, CBRE. “Providers remain optimistic for a hyperscaler expansion into the markets, mirroring similar activity in 2017 and 2018.”

National Trends

The seven primary U.S. data center markets saw 171 megawatts (MW) of net absorption in H1 2019, nearly 57% 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% 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 Mr. Lynch. “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.”

Northern Virginia remained the most active data center market, with net absorption of 126.4 MW in H1 2019.

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




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