Cushman & Wakefield releases Americas Data Center Update

CHICAGO, October 03, 2024--(BUSINESS WIRE)--Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, has released its latest research report on data center markets, showing that power and component lead times continue to slow delivery of new supply. The vacancy rate in the Americas has fallen to 3%, with over 80% of deliveries pre-leased in major markets, pushing lease rates higher.

Demand for artificial intelligence (AI) and cloud data centers surged in the first half of 2024, in both established and emerging markets. Absorption is poised to surpass the record levels set in 2023. Power availability remains a critical concern, prompting developers to explore extensive geographic areas for substantial power options within the next two to three years. Despite an expanding supply pipeline, demand continues to outpace supply, resulting in consistently declining vacancy rates across the board.

"Interest in large-scale power availabilities, plentiful land and less strict latency requirements for AI, has driven hyperscalers and operators to expand in a host of historically peripheral markets such as rural Georgia, North Carolina, Pennsylvania, Texas, Minnesota and the Dakotas, among many other outlying areas just beyond the ‘major’ established data center markets," said Bo Bond, Cushman & Wakefield’s Executive Managing Director. "Active areas of the country are being defined more by the utility provider service area than a more traditional U.S. metropolitan development marketplace."

Where utility providers have been unable to provide power sooner, certain operators have collaborated with power companies to deliver substations, transmission lines or source micro-grid power. Many of these agreements are now being signed directly with third-party energy generation developers, with wind, solar, battery storage, natural gas and even geothermal developments moving quickly across markets. Going forward, Cushman & Wakefield expects to see more operators continue to acquire large acreage high-power capacity sites in even more rural markets. Additionally, some operators will begin to work to secure power along longer timelines.

"AI data centers are increasingly becoming integral to both hyperscale and colocation development pipelines. Although hyperscalers remain the primary end users in this space, several GPU cloud providers are entering the market, seeking hyperscale-level capacity across the Americas," said Ali Greenwood, Cushman & Wakefield’s Executive Director.