Report: Tri-state data center leasing grows 70% in 2022

Jessica Perry//March 13, 2023

Report: Tri-state data center leasing grows 70% in 2022

Jessica Perry//March 13, 2023

2022 by the numbers
2.0 MWnet absorption in the second half of 2022
177.5 MWtotal inventory
105.4 MWunder construction
$0.085-$0.0975 power rate
7.8% vacancy

Pushed by a boost from the financial sector, data center leasing in the local tri-state region recorded a 70% increase in 2022 compared to the year before.

That’s according to a new report from CBRE, which pegged data center space leased last year at 18.1 megawatts as more businesses utilize cloud storage and co-location services.

“Concerns over the economy and rising interest rates have caused more firms than ever before to turn to the cloud, and not incur the added investment of owning and maintaining server equipment,” Senior Vice President Jonathan Meisel, with CBRE’s New Jersey’s offices, said in a statement.

In addition to the financial services sector, Meisel highlighted health care and law firms as having made the transition to off-site services when it comes to handling data.

All that interest, according to fellow New Jersey office resident Senior Vice President William Hassan, helped the sector hit an all-time low vacancy rate of 7.8% at the end of 2022.

The national vacancy rate also hit a record-low, albeit much lower at 3.2%, despite a 17% increase in supply, CBRE said.

And with demand on the upswing, so is construction. Which is good, because space is in short supply.

According to CBRE, 105.4 megawatts of capacity is currently under development in the region, which the firm described as an “unprecedented volume.” In the Garden State, the firm highlighted 9 megawatts of capacity that will come online from QTS in Piscataway in the next six months.

Data center Historical Market Information through 2022.
Historical Market Information

Additional notable activity included CoreSite‘s $62.5 million purchase of 215 County Ave. in Secaucus.

“QTS is also demolishing a portion of their East Windsor campus with the goal of bringing on an additional 42 MW to that campus in 2024,” added Hassan. ”That brings total under construction up to 147.4 MW,” which he pointed out is “closing in on the entire capacity of the market today.”

Looking ahead, CBRE says supply chain issues are still having an impact, with long lead times and uncertain delivery timelines affecting many critical infrastructure parts.

Nationally, CBRE tracks seven primary markets in the data center sector. Of them, Northern Virginia had the biggest percentage of total inventory (52%). The New York Tri-State has the smallest share, at 5%.