Dallas-Fort Worth data centers saw record-setting activity levels in 2015, leading into a robust first half of 2016, according to CBRE Research’s second quarter national data center market update.
Cloud service providers (CSPs) have been a strong driver of activity and demand, accounting for more than 75 megawatts of pre-leased capacity in projects recently delivered or under construction in Dallas-Fort Worth. The high demand for CSPs can be attributed to enterprise users adopting cloud storage at a faster rate than anticipated.
Net absorption totaled 6.7 megawatts in the first half of 2016. Vacancy rates decreased to 20.5% mid-year, from 22.5% at the end of 2015. Delivery of new supply will weigh heavily on market dynamics in Dallas-Fort Worth over the next year and a half. CBRE is currently tracking 730,000 sq ft and 49 megawatts of wholesale colocation product under construction that is set to deliver in the next three to 12 months.
There are currently 11 available and pre-leased supply projects under construction in Dallas-Fort Worth and roughly 26 megawatts of first generation whole space available in the Dallas Metroplex. This capacity is divided by 12 existing data centers with an average size of more than two megawatts per provider.
As projects begin to come online in late 2016 and into 2017, competition among providers will increase, especially for anchor tenants for new projects.
"This is as an opportune time for users and tenants to exercise the competitive nature of the Dallas market to drive pricing and terms in their favor,” said Haynes Strader, Jr. with CBRE’s Data Center Solutions Group in Dallas. “While leasing has been slow for the first half of the year, we are seeing plenty of demand in the Dallas-Fort Worth market and expect absorption to pick up significantly over the next several months."