Phoenix #2 for Data Center Leasing

Credit: Google

By CBRE

Phoenix saw the second-most data center leasing activity in North America in the first half of 2021, according to CBRE’s latest North American Data Center Trends Report.

Phoenix had 20.0MW of net absorption in H1 2021, a 70 percent year-over-year increase. The market also saw the highest percent growth among primary markets, adding 28.7MW of new inventory in the opening half of 2021, up 12 percent from the second half of last year. This was largely due to three providers bringing capacity to market.

Phoenix providers leased more space and power in Q2 than any other quarter in the previous five years as the region’s proximity to major West Coast metros, affordable land rates and abundant power availability attracted new users.

North American data centers saw a growth in construction and net absorption in this year’s first half as cloud service providers and social media companies drove demand, according to CBRE.

Providers brought 214.3MW of new wholesale colocation supply online in the seven primary U.S. data center markets in the first half of 2021, an increase of 7 percent from the year-earlier period. However, vacancy remained low across those markets – as scant as 1.6 percent in Silicon Valley – amid persistent demand.

Relief from tight vacancies likely will come from the 527.6MW of capacity currently under construction in primary markets. That figure marks a 42 percent increase from a year earlier.

Data center users leased more space in the first half of 2021 than in H2 2020 despite fewer deals being signed during this period. Phoenix saw more leasing activity in Q2 2021 than any other quarter in the previous five years. However, several markets including Northern Virginia and Dallas, saw a drop in absorption year-over-year as some users consolidated their operations.

Of the construction underway at the end of the second quarter, 317 MW (60 percent) has been preleased. Markets with notable pre-leasing activity include Silicon Valley, where 70MW (82 percent) of the total MW under construction was spoken for, as well as Dallas (17.5MW), Chicago (17.1MW), New York Tri-State (13.1MW), Phoenix (6MW) and Atlanta (3.5MW). (Source)

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