AI & Cloud Providers Drive Record Demand for Data Center Space
Demand for data center space during the first half of 2024 remains robust as Artificial Intelligence (AI) operators and cloud providers seek quality space for their operations, according to CBRE’s North America Data Center Trends report.
As a result, the vacancy rate in the New York Tri-State area for data centers experienced an all-time low of just 6.5%. Given the lack of inventory, most of the demand remained unfulfilled while rental rates held steady at $140 – $180 kW per month.
CBRE Senior Vice President Jon Meisel noted, “Demand for quality data center space remained unabated, with AI absorbing most of the space under construction, supply for co-location and cloud base requirements of any significant size cannot be satisfied within the market. This is a new phenomenon. As a result, the race is on to get new facilities online, which will contribute to the further rise in rental rates.”
“In addition to the supply constraints, longer lead times for new construction will further hinder new capacity coming to the market,” continued CBRE’s Bill Hasssan. “Power procurement challenges are also delaying expansion plan timeliness for existing data center campus by 12 or even more than 48 months.”
Notable activity in the New York Tri-State region during H1 2024 included a master lease in Northern New Jersey by a financial institution to run a 7-MW enterprise site; the prelease for a DataBank facility in Orangeburg, NY; Equinix’s purchase of a new data center in Secaucus, NJ; and Coresite’s announcement of 5 MW floors coming online in Q4 2024 in Secaucus.