Data Center Crunch Drives Up Rental Costs As Vacancy Rates Plummet
CIODIVE, Monday, July 8th, 2024
In the shadow of resource-hungry hyperscaler infrastructure projects, private data center space is getting hard to come by in congested cloud regions.
Despite steady growth in domestic data center capacity, U.S. companies faced a tight market for private and colocation space during the first three months of the year, according to CBRE research.
The commercial real estate investment firm said surging demand for compute coupled with power grid challenges and construction delays contributed to historically low vacancy rates across major domestic markets and abroad. In Northern Virginia, the world's largest data center market, vacancies dropped below 1% despite an 18% year-over-year inventory increase.
The availability crunch drove up rental fees for private and colocation space globally. Average rates increased 20% year-over-year in North America, while heavy usage regions like Chicago saw rates spike 33% as the vacancy rate dropped to 2.4%, from 6.7% during the same period last year.