U.S. Data Center Report - Midyear 2024

Leasing fundamentals

The U.S. colocation data center market has doubled in size in just four years. Yet vacancy is at a new record low of 3% amid unsatiable demand. Occupancy has increased at a 30% CAGR since 2020. Construction is at extraordinary levels, increasing more than sevenfold in just two years. Preleasing stands at 84% and asking rents have increased between 13% and 37% year-over-year depending on the lease size.

Capital markets

Investor appetite and investment sales activity are up from last year’s levels. Cap rates for core transactions remain in the low to mid 6% range (subject to the turbulent debt markets). Construction and build-to-suit projects remain the most active segment with development yields on powered shell deals in the 7.5%+ range and turnkey developments in the 9.5%+ range. Debt markets continue to be liquid and active with new entrants pushing to compete.

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