By Joshua Burd
Soaring demand for data center space has pushed vacancy in the region to an all-time low in recent months, thanks in part to the growth of firms tied to artificial intelligence.
According to a report by CBRE, vacancy in the New York tristate area fell to 6.5 percent in the second half of 2023, down from 9.8 percent in the first half. Much of that demand came from AI operators, the research found, helping to push rental rates to $130 to $150 per kilowatt for a three- to 10-megawatt requirement per month.
“New Jersey continues to experience strong demand and leasing activity by cloud-based and co-location operations,” said Jon Meisel, a senior vice president with CBRE. “During the second half of 2023, demand remained extremely high, with per kW pricing increasing 20 percent to 30 percent or more.”
The firm’s North America Data Center Trends study also noted that, during the second half of 2023, AI companies preleased more than 40 megawatts in the region, with further expansions currently in negotiations. Meantime, New Jersey saw several notable deals in the third and fourth quarters, including the completion of leasing at QTS’s Piscataway facility and the preleasing of its building in East Windsor to an AI company.
CBRE added that Equinix purchased a new building in Secaucus last year, while a databank facility in nearby Orangeburg, New York, was fully preleased to an AI company and is slated for an expansion of another 30 megawatts.
“In addition to high demand and limited supply, publicly traded operators are seeking higher per kilowatt pricing due to rising capital costs,” CBRE’s William Hassan said. “Power procurement issues are also delaying expansion plan timelines for existing campuses by 24 to 36 months, further putting a crimp on supply.”
