The DCF team this week traveled to Grapevine, Texas in the Dallas-Fort Worth metroplex, one of the nation's busiest and most crowded data center markets, to attend the 7x24 Exchange 2023 Fall Conference. We visited a few data centers while we were there.
As noted this July by commercial real estate services firm Cushman & Wakefield's Jacob Albers in the firm's latest data center power and lease pricing guidance, over the past five years, the development of data centers grew sharply across the U.S., rising from 3.6 GW in 2018, to 8.6 GW in 2023, a whopping 138.9% increase. The analyst said that six key markets—Northern Virginia, Silicon Valley, Phoenix, Atlanta, Chicago and Dallas—accounted for 72% of that development in 2022.
So it came as no surprise to the Data Center Frontier team to find themselves headed down to the Dallas/Ft. Worth metroplex for this year's 7x24 Exchange Fall Conference - right into the thick of things, as far as U.S. data center growth is concerned.
Specifically, CBRE's North America Data Center Trends H1 2023 analysis, released last month, noted that the Dallas-Ft. Worth market had 110.6 MW of net absorption in the reporting period, with 499.4 MW of total inventory and 273.3 MW under construction, and a historically low 4.1% rate of vacancy.
In terms of colocation market momentum, CBRE said that the DFW market's AI leasing activity was strong in H1 2023, with rental rate pricing continuing to rise across all requirement sizes. Due to construction delays in the market, CBRE forecast a significant amount of new available leasing space to be delayed until Q4 of 2024 until Q1 of 2025.
Of the Dallas-Ft. Worth market's key trends in the first half of this year, CBRE wrote that "several hyperscale and enterprise occupiers have submitted competing offers for available space in what little vacancy remains. Hyperscalers and developers are increasingly interested in southern Dallas," added the global commercial real estate services and investment firm. CBRE however cautioned that in DFW, "substation delivery timelines are now 24 to 30 months for power availability."
For its part, JLL's H1 2023 North American Data Center Report warned that the Dallas-Ft. Worth data center market's "already limited supply continues to dwindle, as the remaining swaths of capacity are leased by users seeking power anywhere available."
JLL's report admitted that within DFW, "development of new supply is in progress, with a significant portion preleased to sophisticated users hedging against their future IT infrastructure needs." The firm's analysis concluded that data center demand in DFW remains above historic levels, as national supply continues to be leased.
"Large users of data center space and power are now looking out to 2024, 2025 and 2026 to lease new supply from both under construction and planned developments," added JLL's analysis, while also noting that, within the market, "enterprise demand remains steady, but there are fewer options due to hyperscale activity."
The above slideshow media gallery chronicles several of the 7x24 Exchange Fall show's kickoff highlights, and provides a glimpse of our accompanying data center tours around north Dallas, more about which will be written here in the upcoming timeframe.
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