Leasing remains robust, with no slowdown in sight, and new trends are shaping the sector, according to Newmark Knight Frank research.
By Barbra Murray
The data center market in the U.S. continues to thrive, according to Newmark Knight rank’s most recent data center report for the first half of 2019. New trends are afoot for the sector, but more of the same positive fundamentals are on the horizon.
“The U.S. data center market is healthy…and trending upward,” Bryan Loewen, executive managing director with Newmark Knight Frank, told Commercial Property Executive. The report, based on research from the firm’s data center consulting group including Loewen, Victor Frandsen and Manuel Breidenbach, and information from datacenterHawk and 451 Research, surveys the country’s top 10 data center markets: Atlanta, Chicago, Dallas/Fort Worth, Los Angeles, New York, Northern California, Northern New Jersey, Northern Virginia, Phoenix and Seattle.
Together, these leading markets recorded a robust 118 megawatts of net new absorption in the first half of 2019. Although, the year did get off to a relatively slow start. “Second quarter 2019 leasing has the U.S. back on track for another solid year of leasing/absorption across the data center industry,”Loewen said. “In the top 10 U.S. data center markets, net absorption in the first quarter of 2019 resulted in a somewhat disappointing 27 MW of total additional capacity being leased or licensed. However, the second quarter of 2019 results came in much higher with over 91 MW of new capacity being absorbed.”
Northern Virginia’s position as the largest data center market not just in the U.S., but in the world, remains solid, and so does the area’s fundamentals. The quarter-over-quarter vacancy rate dropped from the low 4 percent range to the high 3 percent range. Development in the market, located just outside Washington, D.C., is pushing land prices in cities like Ashburn to a record high and forcing projects out to other areas like Manassas. Rising land costs aside, Northern Virginia still has one of the highest projected growth rates globally through 2021.
Bryan Loewen, Executive Managing Director, Newmark Knight Frank. Image courtesy of Newmark Knight Frank