CBRE noted that while the industry is showing signs of adapting to this growth, data centers are still plagued by supply chain disruptions and rising construction costs. The report found that new data center inventory will grow 10% in the first half of 2024, up 23% year-over-year.
“Demand for data centers will continue to grow as adoption and use of digital applications increases data storage, computing and processing,” the report noted.
In the first half of 2024 alone, more than 500 megawatts of new data centers were deployed in the eight largest markets in the U.S. and Canada. CBRE noted that the top North American data center markets so far in 2024 are Northern Virginia, Chicago, Dallas-Fort Worth and Silicon Valley, all of which are experiencing significant net absorption growth year-over-year.
According to CBRE, supply in major markets increased 24% year-over-year, or by 1,100.5 megawatts (MW). Similarly, construction activity across major markets reached a record high of 3,871.8MW, up 69% year-over-year. Cloud providers continue to lease the majority of available power capacity, but AI providers are also accounting for significant demand.
Notably, under-construction activity in Atlanta increased 76% year-over-year to 1,289.1 MW.
The Urgent Need for Sustainability
At the same time, data center vacancy rates are falling: CBRE suggests that overall primary market vacancy fell to a record low of 2.8% in the first half of 2024, down from 3.3% in the same period last year, while overall secondary market vacancy fell to 9.7% from 12.7% over the past year.
As the sector evolves to meet new demands, it also seeks to make these innovations sustainable. In particular, as traditional markets reach capacity limits, emerging secondary markets will become increasingly important and ultimately reshape the data center infrastructure landscape.
“Demand for high-performance computing is widening the price gap between traditional facilities and new data centers, in part because older data centers lack the infrastructure to keep up with the power demands of today’s users,” CBRE said in the report.
With 2030 carbon emissions targets fast approaching, the report explores whether improvements in cooling efficiency, waste heat recycling and renewable energy generation sources will become essential for operators in the second half of 2024.
Sustainability has become crucial to the successful growth of data centers, and CBRE’s report highlights how important data centers are not only in underpinning the digital economy, but also in contributing to growth that will continue to influence future innovation for years to come.
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