The data center market in the San Francisco Bay Area continues to thrive and expand, despite rising costs for power and land. According to a recent report by Cushman & Wakefield, vacancies have slightly increased over the past six months but remain below 5%, indicating a strong demand for data center space.
In terms of leasing activity, the first half of 2023 saw an impressive absorption rate of 79 megawatts – almost double that of the previous year. However, there are challenges with power availability as utility providers struggle to meet the demands for large developments currently in planning.
Lease prices in this market have seen significant increases compared to other regions, with hyperscale pricing rising by 42% over the past year and similar increases observed for wholesale and retail rents. Despite these price hikes, vacancy rates only show a slight increase between 4.3% and 4.9%.
Looking ahead, Silicon Valley is expected to maintain its position as one of North America’s top data center markets despite facing obstacles such as limited land availability and power capacity issues.
