Driven by demand from the aerospace, defense and financial services sectors, Denver ranked among the top 10 most active U.S. markets for data center leasing in 2021, according to a new report from CBRE.
The Denver market recorded 8 megawatts (MW) of data center space absorption in 2021—a measure of net leasing activity. This was a 299% increase from 2020, the greatest year-over-year change among the 17 U.S. data center markets that CBRE tracks. Denver added 6.8 MW of new inventory in 2021 and has another 10.5 MW of data center space under construction.
“Aurora and Colorado Springs are capturing much of the data center development activity in Colorado as they are home to numerous military bases and have available land. Aerospace, defense contractors and financial services continue to expand in Colorado, which is driving demand for data centers. Additionally, the city of Aurora and Xcel Energy formalized an incentive packages for data centers, and the cost of power in Colorado Springs remains well below the national average,” said Greg Vernon, senior vice president with CBRE’s Data Center Solutions group in Denver.
CBRE’s latest North American Data Center Trends Report shows that there was 493.4 MW of net absorption in the seven primary U.S. data center markets in 2021, a 31% increase over 2019’s then-record level, and up 50% from 2020.
Despite a 17% year-over-year increase in primary-market inventory, vacancy fell to just 7.2%. Occupiers in need of data center capacity in markets with low vacancy should see more options in 2022 with 727.6 MW of facilities under construction. However, 44% of this space has been preleased.
“We expect continued strong data center demand from cloud service providers and social media companies in 2022, particularly for large-scale, single-tenant facilities, as these firms race to build out metaverse and other digital communities,” said Pat Lynch, executive managing director, Data Center Solutions, CBRE. “The continued adoption of autonomous vehicles, 5G infrastructure, and blockchain technology will also further fuel the data center real estate market in 2022 and beyond.”
Northern Virginia remained the most active data center market with net absorption of 303.3 MW in 2021 – more than four times that of Atlanta, the second-most-active market.