By Joshua Burd
The data center market in and around New Jersey saw a notable rebound in the first half of 2021, thanks in large part to demand from the financial services sector.
That’s according to a new report by CBRE, which found that vacancy in the New York tristate region fell to 12.1 percent by midyear. The region saw 6.0 megawatts of net absorption in the first six months, double the total for all of 2020, amid requirements from banks and increased activity from cloud service providers over the past three months.
“The price of data center power per kilowatt has remained stable in the tristate region, mostly due to the historic cost-of-build compression and ingrained build efficiencies,” said Jon Meisel, a senior vice president with CBRE and longtime data center expert. “However, the market should keep a close eye on whether new supply will affect pricing in the future.”
The report also noted that almost all of the recent leasing activity was the result of existing data center tenants expanding. But it said that new construction in the market was a strong indicator of ongoing demand, citing projects by operators such as Coresite, CyrusOne, Sabey and QTS, which will add 38.1 megawatts of capacity to the market’s total existing inventory of 160.6 megawatts.
“We have new providers entering the market, hyperscale firms circling and spec construction of white space for the first time in almost a decade — all signs of just how strong the data centers market is in the region,” CBRE’s William Hassan said.
Additionally, the report analyzed development activity including Digital Realty’s delivery of the first two facilities on its 600,000-square-foot campus in Totowa, as well as the completion of two East Coast data centers by a major global bank.
Nationally, CBRE said North American data centers saw growth in construction and net absorption in this year’s first half, as cloud service providers and social media companies drove demand. The firm found that providers delivered 214.3 megawatts of new wholesale colocation supply — which is available for lease — in the seven primary U.S. data center markets during the first and second quarters, marking an increase of 7 percent from the year-earlier period.
Vacancy, however, remained low across those markets, which include Northern Virginia, Dallas, Silicon Valley, Chicago, Phoenix, Atlanta and the New York tristate region, according to the report. New projects currently under construction in those regions — which total 527.6 megawatts, up 42 percent increase from a year earlier — should relieve some of that pressure.