Strong demand for data center space in the second half of 2023 led to record low vacancy rates in the New York tri-state region, including New Jersey, with vacancy rates dropping to 6.5% from 9.8% in the first half of 2023. In 2023, according to CBRE’s recent North American Data Center Trends Report.
Much of that demand came from artificial intelligence operators, which also affected rental rates, pushing them to $130 to $150 per kilowatt for monthly requirements of 3 to 10 megawatts.
“New Jersey continues to see strong demand and leasing activity for cloud-based colocation operations. Demand continues to be extremely strong in the second half of 2023, with prices per kilowatt up more than 20% to 30%,” said CBRE Senior Vice President. said John Meisel.
CBRE’s William Hassan added: “High demand and limited supply, along with rising costs of capital, are forcing listed operators to seek higher pricing per kW.” “Power procurement issues have delayed the expansion schedule for existing campuses by 24 to 36 months, further tightening supply.”
In the second half of this year, the AI company has pre-leased more than 40 MW and is currently negotiating further expansion.
Notable activity in New Jersey in the second half of 2023 included the completion of the lease for QTS’ Piscataway facility, according to CBRE data. And East he is pre-leasing its building on the Windsor campus to his AI company. It is being built to accommodate at least 20 megawatts.
CBRE also added that during the quarter, Equinix purchased a new building in Secaucus, and a data bank facility currently under construction near Orangeburg, New York, was fully pre-opened to the AI company.
