Meta announced it is expanding the Meta Mesa Data Center with three new buildings. The campus, which was first announced in August 2021, will now include five buildings totaling more than 2.5 million square feet.
Phoenix ranks No. 3 for data center leasing and new supply
The Phoenix data center market ranked third in the U.S. for leasing activity in the first half of 2022, fueled by demand from hyperscalers preparing for future expansion, according to a new report from CBRE.
The market recorded 46.3 megawatts (MW) of net absorption in H1 2022, already surpassing the 29.8 MW of net absorption recorded in all of 2021.
Though Phoenix ranked third for new supply in H1 2022 with 37.5 MW of new inventory delivered, vacancy decreased 139 basis points to 7.8 percent. The market has 85.5 MW of capacity under construction with 77 percent preleased. Development is concentrated in Mesa, Goodyear and Glendale.
“The metro Phoenix data center market is increasingly becoming an epicenter for hyperscale data center leasing activity,” said Mark Krison, Senior Vice President with CBRE. “With strong leasing activity and one of the largest development pipelines in the country, Phoenix has solidified its place as a top data center market.”
CBRE’s latest North American Data Center Trends Report found that 352.9 megawatts (MW) of new supply went online in the seven primary U.S. data center markets* in the first half of 2022, a 20 percent increase year-over-year.
Despite the influx of additional capacity, data center vacancy decreased to an average of 3.8 percent across the seven primary markets in H1 2022—down from 10.3 percent in H1 2021—as large cloud users raced to secure space to accommodate anticipated future growth. Significant preleasing of space under construction in prior years also contributed to the large drop in vacancy.
For the first time since 2017, tight market conditions caused average asking rents to increase in both primary markets (5.9 percent to $127.50 per kW) and secondary markets (2.3 percent to $133.00 per kW). Primary-market vacancy will remain tight for the foreseeable future, as 73 percent (1,170 MW) of the 1,601.5 MW of the under-construction supply was preleased as of the end of H1 2022.
“Supply chain disruptions and a lack of available power and land in some major markets could delay new construction deliveries over the balance of the year and beyond,” said Pat Lynch, Executive Managing Director, Global Head of Advisory & Transaction Services, Data Center Solutions, CBRE. “As a result, we expect continued rising rents nationally, and more occupiers turning to secondary and tertiary markets to meet their needs. These smaller markets will also continue to benefit from an increase in edge data center deployments, driven by broader adoption of AI, 5G and blockchain technologies.”
Top U.S. Data Center Markets
Northern Virginia remained the most active data center market with net absorption of 269.3 MW—a 281 percent increase from H1 2021—and more than quadruple that of Silicon Valley, the next highest market. Net absorption totaled 453.4 MW across the seven primary markets in the first half of 2022, nearly triple that of the first half of 2021.
Top 10 Most Active Markets
Northern Virginia (219.5 MW) accounted for 62 percent of new primary-market supply delivered in H1 2022. Other markets with notable supply growth in the first half of the year included Silicon Valley (56.0 MW), Phoenix (37.5 MW), Hillsboro, Ore. (30.0 MW), and Atlanta (20.0 MW).
To download the report, click here.