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June 18, 2024
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Southern California Sees Significant Growth in Data Center Leasing Activity in 2021


This report provided by CBRE

Driven by cloud service providers and enterprise firms, data center leasing activity in Southern California picked up significantly in 2021, according to a new report from CBRE.

Southern California had 7.7 megawatts (MW) of net absorption in 2021, a 38% increase from 5.6 MW in 2020, as enterprise and network-centric companies secured capacity. SoCal data center market vacancy slightly decreased from 18.9% (24 MW) in 2020 to 18.4% (23.6 MW) in 2021. While there is currently 14.9 MW of data center product under construction, vacancy rates will continue to decline until significant new capacity is delivered to the market.

“As the termination point for subsea cable networks facilitating access to Asia Pacific markets, Greater Los Angeles has become a critical hub for domestic and international customers who need trans-Pacific network connectivity,” said CBRE Vice President Jennie Karnes. She added, “Demand in the market is positioned for growth and is mainly driven by hyperscale and enterprise companies seeking minimal delay connectivity and access to public cloud service providers to support the acceleration of hybrid infrastructure strategies.”

National Trends

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.”

Top U.S. Data Center Markets

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.

Top 10 Most Active Markets

Market / 2021 Net Absorption

Northern Virginia / 303.3 MW
Atlanta / 70.4 MW
Phoenix / 29.8 MW
Dallas/Ft. Worth / 28.6 MW
Chicago / 27.4 MW
Silicon Valley / 23.3 MW
Hillsboro / 21.2 MW
New York Tri-State / 10.5 MW
Denver / 8.0 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, OR (234.8 MW); Atlanta (160.5 MW); Silicon Valley (94.6 MW); Phoenix (85.5 MW); and Dallas/Ft. Worth (75.8 MW).

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