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Washington State Ranks as Top Ten Market in the U.S. for Data Center Leasing

4/10/24

Washington State was among the top ten markets for data center leasing in 2023, according to CBRE’s latest North American Data Center Trend Report. Data center tenants and operators were attracted to the region’s renewable energy and low power costs, as well as the state’s recently expanded tax abatement program.

Central Washington had 20.9 megawatts (MW) of net absorption – a measure of net leasing activity – in 2023, the eighth highest among the markets. Although activity was down year over year, the region’s green power and low power costs drive demand. Power rates in Central Washington remain near all-time lows and are cheaper than in other U.S. markets, despite a slight increase in 2023. In H2 2023, Central Washington power rates were $0.028-$0.04 compared to $0.06-$0.10 in Seattle and $0.126-$0.26 in Silicon Valley.

Seattle ranked tenth overall in terms of leasing activity with 10.6 MW of net absorption in 2023, up from 15th (3.6 MW) in 2022. Seattle’s green power is attracting new demand for larger tenant requirements, with most demand driven by artificial intelligence operators and hyperscalers.

“Washington state’s connectivity, data center tax incentives and low-cost green power is attracting tenants and operators from across the U.S. Notwithstanding, availability of large blocks of power are limited, and delivery for new power builds take planning and wait time,” said Jane Blair, first vice president with CBRE Data Center Solutions in Seattle.

Central Washington was at an all-time vacancy low at 0.2% in H2 2023, which was the lowest vacancy among the 18 data center markets tracked by CBRE. Seattle vacancy was 7.2% in 2023, down from 12.7% in 2022.

Both Central Washington and Seattle benefit from the availability of renewable energy sources. Fifty-four percent of Central Washington’s data center market is fueled by hydropower, with wind making up another 8%. In Seattle, 86% of energy comes from hydropower, with 5% attributable to wind.

Meanwhile, hyperscalers and data center developers have expanded their search for suitable development sites. Last year, Washington State expanded its data center sales tax abatement program to include qualifying Western Washington markets. The tax benefits apply to renovation or construction of qualifying data centers.

Central Washington had 99.7 MW under construction in H2 2023, 70% of which was pre-leased. Seattle had 3.5 MW under construction, with 1 MW delivered in H2 2023.

At the end of this year, JUNO Trans-Pacific subsea cable system is expected to be ready for service, with intake at Harbour Pointe, Wash. The system connects Washington, Japan and California, and will have the largest capacity of any subsea cable in the Pacific.




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