CBRE reports that average asking rent prices in major North American data center markets have experienced a significant increase of 20% to 54% in the past eight months.

The expansion in markets such as Chicago, Dallas-Ft. Worth, Northern Virginia, Phoenix, and Silicon Valley is being propelled by robust demand that is exceeding the rise in supply. As a result, rates have reached levels near their highest point of 2010 to 2011.

An anticipated influx of new capital and investments was expected to decrease rental rates. However, CBRE stated that power limitations are causing delays in new development and are the primary obstacle to increasing supply.

This has led to increased leasing competition for existing data centers and has resulted in high rental prices. Currently, occupiers tend to pre-lease space 18 to 36 months ahead of time, which is far sooner than the norm of six to 12 months.

In terms of vacancies and construction, vacancy rates have fallen since 2021 despite booming construction. In the second half of 2023, vacancies hit record lows in New York tri-state, Seattle, Central Washington and Chicago, CBRE noted.

Meanwhile, an all-time high of 3,077.8 MW is under construction in primary markets, up 46% since the first half of 2023.

The statistics comparing asking rent in the first quarter of 2024 versus the first half of 2023 for 3 to 10+ MW requirements were notable. For example, the largest rate of increase was Silicon Valley, where asking rents were $170 to $200 compared with $115 to $125, a 54% jump. The lowest, but still noteworthy, was Phoenix at $130 to $170, compared with $120 to $130, a 20% increase.