U.S. DATA CENTER TRENDS REPORT H1 2018 - CBRE€¦ · GTT’s fibernetwork footprint. 2. Iron Mountain’s acquisition of IO Data Centers for $1.3 $ Millionsbillion. The transaction

Surging demand from large cloud users driving record absorption

U.S. DATA CENTER TRENDS REPORT H1 2018

CBRE Research` © 2018 CBRE, Inc. | 2


Contents

03 MarketFundamentals

07 CapitalInvestment

09 ThingstoWatch

11 PrimaryMarkets

14 SecondaryMarkets

16 Appendix

Executive SummaryDemandfromhyperscalecloudusersledtomorethan177megawatts(MW)ofnetabsorptioninthefirsthalfof2018.

Withnearlytwo-thirdsofthe2017netabsorption(anannualrecord)alreadyrecordedinH12018,themarketisonpaceforanotherrecordyear.

Stronginvestorinterestinthedatacentersectorcontinued,withmorethan$7billionofinvestmentinH12018,47%ofwhichwasinasset-leveltransactions.

DevelopmentpipelinesinlargeprimarymarketslikeNorthernVirginiaandSiliconValleyarerapidlybeingpreleasedtomeetthespeed-to-marketrequirementsofoccupiers.

NationalpricingtrendsdidnotkeeppacewithstrongmarketfundamentalsinH1,ascloudusersdemandedlowerpricesforthelargewholesalecolocationcapacitytransactionstheyrequire.



CBRE Research

TheNorthAmericanwholesaledatacentermarketcontinueditssubstantialgrowthofrecentyearsinH12018.Despitethedeliveryofnewsupply,positivenetabsorptionresultedfromstrongdemandfromhyperscalecloudusersfordeploymentsofteninexcessof3MW.InNorthernVirginia—theworld’slargestdatacentermarket—65%ofnetabsorptioncamefromhyperscalecloudusers.ThesevenprimaryU.S.datacentermarkets—Atlanta,Chicago,Dallas/Ft.Worth,NewYorkTri-State,NorthernVirginia,PhoenixandSiliconValley—recordedmorethan177MWofpositivenetabsorptioninH1.Withnearlytwo-thirdsoftheannualrecordabsorptiontotalin2017alreadyrecordedinH12018,themarketisonpaceforanotherrecordyear.

Market Fundamentals

*Vacancy Y-o-Y changes are calculated by comparing the difference between H1 2017 and H1 2018.**Rental rates are quoted asking rates for 250+ kW at N+1/Tier III requirements. Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

Market InventoryY-o-Y

ChangeAvailable MW/ Vacancy Rate

Y-o-Y Change*

Net Absorption

Rental Rates (kW/mo)**

Northern Virginia 805.8 MW p 198.0 MW 53.3 MW / 6.6% p 80 bps 100.0 MW $120-$140

Phoenix 212.9 MW p 46.0 MW 25.8 MW / 12.1% p 320 bps 32.5 MW $120-$135

Dallas/Ft. Worth 267.8 MW p 33.4 MW 51.3 MW / 19.2% p 40 bps 19.1 MW $120-$140

Silicon Valley 234.6 MW p 40.0 MW 11.4 MW / 4.9% q 50 bps 10.6 MW $150-$170

Chicago 245.0 MW p 56.6 MW 27.6 MW / 11.2% p 870 bps 9.4 MW $130-$145

Atlanta 131.0 MW p 6.0 MW 19.2 MW / 14.7% u 0 bps 3.0 MW $120-$135

New York Tri-State 157.3 MW p 2.1 MW 22.4 MW / 14.2% q 400 bps 2.5 MW $130-$150

Figure 1: Primary Market Fundamentals

Figure 2: H1 2018 Wholesale Secondary Market Fundamentals

*Vacancy Y-o-Y changes are calculated by comparing the difference between H1 2017 and H1 2018.**Rental rates are quoted asking rates for 250+ kW at N+1/Tier III requirements. Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

Market InventoryY-o-Y

ChangeAvailable MW/ Vacancy Rate

Y-o-Y Change*

Net Absorption

Rental Rates (kW/mo)**

Austin/San Antonio 124.1 MW p 9.0 MW 10.1 MW / 8.1% q 130 bps 9.8 MW $140- $155

Seattle 95.5 MW p 2.0 MW 12.8 MW / 13.4% q 470 bps 6.1 MW $125-$150

Southern California 104.4 MW p 16.0 MW 19.6 MW / 18.8% p 250 bps 5.2 MW $130-$160

Denver 92.6 MW p 4.4 MW 21.7 MW / 23.4% p 70 bps 1.8 MW $130-$150

Houston 97.1 MW p 0.4 MW 22.0 MW / 22.7% q 230 bps 1.1 MW $140-$165

Charlotte/Raleigh 55.6 MW p 4.7 MW 14.1 MW / 25.3% p 300 bps -2.9 MW $130- $145



CBRE Research

Demandintheprimarymarketswasalsofueledbyenterprisedeploymentsrangingfrom250KWto500KW.LargerexpansionsandanincreaseinsmallerwholesaledeploymentsledtoactivityabovehistoricalaveragesinsecondarymarketssuchasAustin/SanAntonio,HoustonandSeattle.

Strongdemandfromdatacenterprovidersresultedinmorethan474MWofcapacityunderdevelopmentwithinU.S.primarymarketsinH1,nearly55%ofwhichispreleased.AlargeportionofthispreleasingactivitywasbyhyperscalecloudusersinNorthernVirginia.

Similartohyperscaleusers,enterpriseend-users’needforrapiddeploymentsremainedacrucialfactorforsite-selectiondecisions,withafocusonreadilyavailableturnkeydatacenterspace.Furthermore,manyenterpriseendusers’businessstrategiesinvolvedstrategicinfrastructuredeploymentsandconsolidationoftheirowned-portfolios.InsecondarymarketslikeSeattle,theincreaseddemandstemmingfromexpansionsandnewentrantsledtoannouncementsoffuturedevelopmentprojects.

Figure 3: Inventory Growth of Primary Data Center Markets Since 2015% Growth

*Tri-State Region; Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

0%

50%

100%

150%

Dallas/Ft. Worth Northern Virginia Chicago Silicon Valley Phoenix Atlanta New York*

Figure 4: Primary Markets - Net Absorption & Pre-Leasing

Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

Net Absorption (MW) Pre-leased (MW)Megawatts

0

50

100

150

200

250

300

2016 2017 H1 2018



CBRE Research

100.0

32.5 19.1 10.6 9.4 3.0 2.5

297.2

61.4 45.6 29.5

3.1 21.0 16.5

0

50

100

150

200

250

300

350

Northern VA Phoenix Dallas/Ft. Worth Silicon Valley Chicago Atlanta New York*

Figure 5: Net Absorption vs. Under Construction by Primary Market

*Tri-State; Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

H1 2018 Net Absorption (MW) H1 2018 Under Construction (MW)Megawatts

Figure 6: Net Absorption vs. Under Construction by Secondary MarketH1 2018 Net Absorption (MW) H1 2018 Under Construction (MW)Megawatts


8.0

2.5 3.2

11.6

0.0 1.0

0

2

4

6

8

10

12

14

Austin/ San Antonio Seattle Southern California Denver Houston Charlotte/Raleigh Austin/San Antonio

Regardlessoftheusertype,vacancyratesforcommissioneddatacenterspaceinmostmarketsslightlyincreased,asdeveloperscontinuedtodeliverlargeblocksofcapacity.Forthefirsttime,theSiliconValleyvacancyratefellbelow5%,asfirst-generationavailablecapacityremainedscarce.Thesetightmarketconditionshaveforcedoccupierstoexpandintootherprimaryandsecondarymarkets.

9.8

6.1 5.2

1.8 1.1

-2.9

8.0

2.5 3.2

11.6

0.0 1.0

-6

-4

-2

0

2

4

6

8

10

12

14



CBRE Research

Figure 7: Construction Pipeline by Primary Market – Available & Pre-Leased Supply Under Construction

*Tri-State; Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

H1 2018 Pre-Leased H1 2018 U/C AvailableMegawatts

Phoenix,withrecordlevelsofconstruction,isarecipientofthisexpansionbaseddemand.Landtransactionscompletedafewquartersagohaveledtonewprovidersandexpansionswithinthemarket.Tomatchthedemand,morethan60MWarecurrentlyunderconstructioninPhoenix,withmorethan120MWannouncedforfuturebuildout.

0

50

100

150

200

250

300

350

Northern Virginia Phoenix Dallas/Ft. Worth Silicon Valley Atlanta New York* Chicago



CBRE Research

NorthAmericandatacenterinvestmentvolumereached$7billioninH1,inclusiveofsingle-asset,portfolioandentity-leveltransactions.Thislevelofinvestmentisonlyatnearly35%of2017’srecord-settingtotalvolumedrivenbylargeentity-leveltransactions.InvestmentvolumeinH1wasbalancedbetweentransactiontypes,asopposedto2017’sentity-levelheavyvolume.Thefor-saleinventoryiscompetitiveandincludesreadilyavailablecorporateassetstradingforcapitalizationratesrangingfrom5.5%to7.5%forstabilizedassets.

The three largest transactions in H1 2018 were:

1. GTTCommunications’acquisitionofInterouteandits15datacenters,17virtualdatacentersand51colocationfacilitiesfor$2.3billion.TheacquisitionprovidesasignificantincreaseinGTT’sfibernetworkfootprint.

2. IronMountain’sacquisitionofIODataCentersfor$1.3billion.ThetransactionincludedthelandandbuildingsoffourdatacentersintheU.S.andwilladdmorethan700,000sq.ft.ofcapacitytoIronMountain’sportfolio.

3. Equinix’sacquisitionoftheInfomartDataCenterfacilityinDallasfor$800million.Thiswasthelargestsingle-assettransactioninH12018.InfomartisasignificantinterconnectionhubintheU.SandprovidesEquinixwithadditionalcapacityfortheirofferings.

Singleandportfolioasset-levelsalescontinuedtogarneralargershareoftotalNorthAmericaninvestmentvolume,accountingfor48%ofthetotalinH1comparedto27%oftotalvolumeinallof2017.Significantasset-leveltransactionsincluded:

• Mapletree’sacquisitionof14datacentersfromCarterValidusfor$750million.Theportfolioisfocusedonlongerleaseswithestablishedtenants,spansninestatesandaddsmorethan2.0millionsq.ft.toMapletree’smanagement.

Capital InvestmentFigure 8: North American Investment


$ Millions

0

5,000

10,000

15,000

20,000

25,000

2011

2012

2013

2014

2015

2016

2017

H1 20

18

Figure 9: North American Investment


Asset Entity$ Millions

0

5,000

10,000

15,000

20,000

25,000

2017 H1 2018



CBRE Research

Transaction Type Buyer Seller Sale Price (M)* Buyer Type Location

Entity GTT Communications Interoute $2,300.0 Occupier/Operator North America

Entity Iron Mountain IO Data Centers $1,315.0 Occupier/Operator North America

Asset Equinix (REIT) ASB Real Estate, DCI Technology Holdings $800.0 Occupier/Operator North America

Entity Equinix (REIT) Ontario Teachers' $792.0 Occupier/Operator APAC

Asset Mapletree Carter Validus $750.0 Investment North America

Asset IPI Data Center Partners Management ASB Real Estate Undisclosed Occupier/Operator North America

Asset Ensono Wipro $405.0 Occupier/Operator North America

Asset Keppel DC REIT Kingsland Development, Nylect Holdings $295.0 Occupier/Operator APAC

Asset Iron Mountain Evoswitch $235.0 Occupier/Operator EMEA

Entity InfraVia Green Data Centers $217.0 Occupier/Operator EMEA

Asset NextDC APDC $212.0 Occupier/Operator APAC

Managed Services Internap SingleHop $132.0 Occupier/Operator North America

Asset CBRE Global Investors Duke Realty $109.9 Occupier/Operator North America

*MillionsNote: includes closed deals over $100 million. Source: CBRE Research, CBRE Data Center Solutions, H1 2018.

Figure 10: H1 2018 Largest Global Transactions

• Ensono’sacquisitionofWipro’shosteddatacenterbusinessfor$405million,whichincludeseightdatacentersandmorethan900employees.

ManagedservicescontinuedtotradeinH1.Forexample,InternapboughtSingleHopfor$132milliontostrengthenitsmanagedhostingandprivatecloudofferings.Futuremanaged-serviceconsolidationsareexpectedascompaniesseekadditionalstrategicacquisitionstobolstertheproductstheycanprovidetotheircustomers.

While2018investmentvolumemaynotexceedtherecordvolumeof2017,theinvestmentmarketisexpectedtoproducestrongresultsdrivenbythefollowing:

• Sale-leaseback/partial-leasebackfromenterpriseusers.

• Hyperscaleuserslookingfordevelopmentpartnersandcreativewaystodeliverlow-costturnkeycapacity.

• Continuedinfluxofnewinvestorsinthedatacenterspace.



CBRE Research

Things to Watch

• Howwilltheappetiteforturnkeydatacenterspacecontinuewithtechnologicaladvances,including“bigdata,”edgecomputing,5GandtheInternetofThings(IoT)?

• Willhyperscalecloudactivityleadtoanotheryearofrecord-breakingabsorption?

• Willrelativelyhighlevelsofpreleasingleadtomorespeculativedevelopment?

• Willproviderscontinuetodeliversupplyinmarketstomatchdemandorwillactivecapacityrequirementsseeknewmarketopportunities?

• Whatwillbetheimpactofnewprovidersonmarketdynamics?

• WillthevolumeofenterprisedatacentersalesincreaseasmorecompaniesadoptaHybridITdeploymentstrategy?

• Willtherebeadditionalproviderconsolidationthroughmergersandacquisitions,whichhavehistoricallyaccountedformuchoftheannualinvestmentvolume?

• Areinvestorsstillattractedtofor-saleassetsthatneedupgrading?

TheEvolutionofDemand

CapitalInvestment



Market Profile

Denver

Mature/Primary Emerging/SecondaryDeveloping/Tertiary

High

Moderate

Low Charlotte/Raleigh

Northern Virginia

Atlanta

Seattle

Phoenix

Chicago

Dallas/Fort Worth

Silicon Valley

Southern California

Austin/San Antonio

New York Tri-State

Houston

RECOVERY CONTRACTION

EXPANSION BALANCED/ GROWTH LA

ND

LORD

FA

VORA

BLE

TEN

AN

T FA

VORA

BLE

VACANCY UNDER SUPPLY RENT

VACANCY OVER SUPPLY RENT

MARKET EQUILIBRIUM

Chicago

Northern Virginia

Phoenix

Silicon Valley

Southern New York Tri-State

Dallas/Ft. Worth

Atlanta


Market Growth

Figure 11: Data Center Market Cycle: Primary U.S. Markets


Figure 12: Data Center Market Maturity

*The Data Center Market Cycle Graph reflects the current wholesale market conditions, taking into consideration the following variables:

• Demand (leasing, absorption, requirements in the market)

• Supply (existing vacancy, future availabilities, construction pipeline)

• Rental rate trend

Distance from the horizontal market equilibrium line generally implies the relative strength and/or weakness of a market relative to each other and their historical trends. Arrows indicate most recent trend.

Categories typically represent the following conditions:

Expansion: landlord/provider-favorable conditions; under-supplied market, strong demand, declining vacancy and upward pressure on pricing

Balanced/Growth: landlord/provider-favorable conditions; new supply more evenly balanced, stable or slightly increasing vacancy, rent growth slowing or flat

Contraction: tenant-favorable conditions; over-supplied market, increasing vacancy, weak demand, downward pressure on pricing

Recovery: tenant-favorable conditions; stable or slightly declining vacancy, moderate but improved demand, rent growth flat or increasing

Demand: A Tale of Two Segments



Primary Market Insights

Atlanta’sdatacentermarketispositionedforgrowth,withanall-time-record21MWcurrentlyunderdevelopment.ExpansionsbySwitch,CyrusOne,zColo,T5andDatabankwillbringnewcapacitytothemarketinthecomingquarters.Morethan$5billionoffutureinvestmenthasbeenannouncedbymulti-tenantdatacenterprovidersandhyperscalecloudproviders.ThisincludesT5’s$100millionATLIIAtlantafacility.

Overall,thelimitedlargeblocksofavailabilityledtothecompletionofsmallertransactionsinthefirsthalfof2018.Upondeliveryofcapacityinthenextsixto18months,hyperscaleandenterpriseuserswith

activerequirementswillhavemoreoptionstofindavailabilityforadditionaldeployments.

Manyfactors,includingnationallycompetitiveincentives,cost-effectivelandandrelativelylowoperatingcosts,willcontinuetogrowdemandintheAtlantamarket.Noteworthychangestotax-incentivepolicyoccurredin2018,asthestateofGeorgiarolledoutnewlegislationtoaidinattractingdatacenterdevelopmentsofmorethan$250millionthroughreducedsalestaxondatacenterequipment.ThisspecificlegislativechangeisdesignedtohelpAtlantacompetefordatacenterbusinessbothregionallyandnationally.

Atlanta Net Absorption* 65.6%

Vacancy Rate* 14.7%

DeliveryofnewsupplyinChicagowelloutplaceddemandinH12018,asthevacancyrateincreasedbynearly9percentagepointsfromayearago.Forthefirsttimeinmultiplequarters,themarketfeaturedseveralimmediatelyavailablelarge,contiguousblocksofcommissionedcapacity.Whilethenewsupplyhasyettobeabsorbed,interestisnotlacking.Theinteresthasledtonew

providersenteringorplanningtoenterthemarket(RagingWire,Stream,CoreSiteandCloudHQ)andexpansionsbyexistingproviders(ServerFarmandT5).AsofQ22018,morethan140MWofnewcapacityisplannedinChicago.Allthingsconsidered,Chicagoremainsgeographicallyanddemographicallywell-positionedtocapturefuturedemandfrombothenterpriseandhyperscaleusers.

Chicago Net Absorption* 123.8%

Vacancy Rate* 11.2%

*Arrows indicate change from H1 2017 to H1 2018.



Dallas/Ft.Worthbegan2018withstrongleasingactivityfromtheenterprisesector,withapproximately25%comingfromnationalhyperscaleuserstaking1MWto4MWblocks.TheabsorptionwasdiversifiedacrossCyrusOne,Aligned,QTS,DigitalRealty,DataBankandRagingWirefacilities.ProvidersincludingDigitalRealtyandQTSaddedsupplytotalingmorethan20MWinH1tocapturesomeofthehighestdemandforwholesalecapacityinthecountry.

Dallashasbecomeoneofthefewdatacentermarketsintheworldtoprovidenumerouscontiguousavailabilitiesandoptionsforfutureon-siteexpansions.Thus,itiswell-positionedfor

largerhyperscaledeploymentscomparedtomanyothernationalmarketsthathavesub-8%vacancyrates.RecentlycompleteddevelopmentsincludeDataBank’sPlanocampusandCyrusOne’sAllencampus.NewdevelopmentsfromStream,QTSandEdgeCorewillbreakgroundthisyear.

Equinix’s$800millionacquisitionoftheInfomartDataCenterfacilityfromDCITechnologyHoldingsandASBRealEstatemarkedthelargestNorthAmericansingle-assetdatacentertransactioninH12018.Thepropertytradedfornearly$500persq.ft.andprovidesEquinixwithinterconnectionaccessunlikeanyproviderintheregion.

Dallas/Ft.Worth Net Absorption* 42.8%

Vacancy Rate* 19.2%

TheNewYorkTri-StatedatacentermarketremainedsteadyinH12018.Positivemomentumfromleasingactivitybroughtconstructionactivityto16.5MW,ledbyIronMountain,DigitalRealtyandQTS.Morethan23%ofthisunder-constructioncapacityispreleased—thehighestlevelofpreleasinginthreeyears.Additionalabsorptionshouldcomefromexistingrequirementsforin-marketexpansions,primarilyfromfinancialandhealth-carecompanies.

Traditionallydrivenbyretailcolocationactivity,theNewYorkTri-StatemarketcapturedbothsmallerwholesaleandretaildeploymentsinH1.Amideconomicandfinancialconstraints,providerscontinuetodiversifyofferingstoattractprimarilyretailwithsmallerwholesalecolocationdeployments.

NewYorkTri-State Net Absorption* 16.7%

Vacancy Rate* 14.2%

TheNorthernVirginiadatacentermarkethadthestrongeststartofanyU.Sdatacentermarketwithnetabsorptionof100MW.MoreabsorptionoccurredinNorthernVirginiainH1thaninalltheotherprimarymarketscombined.Despiteseveralnewlarge-scaledeliveries,therecorddemandhasresultedinlimitedlargeblocksofavailabilityandkeptthevacancyratetoatight6.6%.Newprojectstotaling297MWincapacityfromprovidersincludingCloudHQ,CyrusOne,DigitalRealty,VantageDataCenters,SentinelDataCenters,Sabey

DataCentersandQTSarealready79%preleased.Projectswithanother280MWofcapacityareplannedforthesecondhalfoftheyear.

Colocationdemandisforcinglocalgovernmentstocarefullyconsiderlegislationthatcouldaffectnewconstructionandgrowth.InPrinceWilliamCounty,theboardofsupervisorsrejectedlegislationthatwouldhaveraisedthetaxratefordatacenterequipment.

NorthernVirginia Net Absorption* 141%

Vacancy Rate* 6.6%




Phoenixrecorded32.5MWofpositivenetabsorptioninH1,makingitoneofthemostactivedatacentermarketsinthecountry.Wholesaleprovidersexpandedacrossthemarket,addingmorethan46MWofnewsupply.Withtheseadditions,thewholesalevacancyraterose320bpsto12.1%.Constructionactivitytotalledmorethan60MWofcapacity—thesecond-largestamountofallprimarymarkets.ExpansionsandnewfacilitiesareunderwaybyproviderssuchasCyrusOne,AlignedDataCenters,IronMountainandEdgeCore.

Withagrowingconstructionpipeline,Phoenixhasthepotentialforfuturegrowth.Therearenumerousmulti-megawattrequirementsduetoPhoenix’sstatusasanattractivemarketforWestCoastandnationalexpansion.Strongincentiveprogramsandloweroperatingcostsshouldcontinuetoattracthyperscaleandenterpriseusers.

Phoenix Net Absorption* 802.8%

Vacancy Rate*12.1%

SiliconValleyremainedthemostsupply-constrainedmarketintheU.S.,withasub-5%vacancyrateforthefirsttimesinceCBREbegantrackingthedatacenterindustryin2013.Thevacancyratehasdropped50bpssincethebeginningof2017,asfirst-generationwholesalecapacityisinextremedemand.NetabsorptioninH12018primarilyoccurredinCoreSite’snewSV7facilityduetolimitedavailabilityinotherfacilities.Someproviders,includingEquinix,areattemptingtocapturewholesalecapacityinthemarket,astheyhavecommitmentsfrommultipletechnology-focusedcompanies.

Newsupplytotaling29.5MWincapacityiscurrentlyunderwaybydevelopers,includingVantageDataCenters,CoreSiteandDigitalRealty.Additionalsupplyisexpectedfromnewentrantstothemarket,includingRagingWire.Demandhasledtopreleasinglevelsof45.1%ofnewcapacity.Wholesaledemandisexpectedtomatchpreviousyears’levels,asnewcapacitycomesonlineoverthenextsixto18months.

SiliconValley Net Absorption* 67.9%

Vacancy Rate* 4.9%




Secondary Market Insights

• Demandremainsstable,withactivityprimarilyinDataFoundry,CyrusOneandDigitalRealtyfacilities.

• ConstructionactivityisprimarilybyDigitalRealtyandDataFoundry.

• Enterpriseusershaveaccountedformuchof2018’sleasingactivity.Mostdealsareretailcolocation,withlargerdealsaveraging250KW.

• Muchofthemarketdemandisfromlargehyperscaleusersofferingamixtureofinternetcloudexchanges.

Austin/SanAntonio Net Absorption* 68.8%

Vacancy Rate* 8.1%

• Fundamentalshaveflattenedoverthepastfewquarters.Providersinthisemergingmarketareablendofsingle-tenantdatacentersandsmallerretailandwholesalecolocationfacilities.

• Activityisfromsmallerdeployments,average250KW,focusedongeographicaccess.

• Enterpriseusersareprimarilyinthefinancialandtechnologyindustries.

• TierpointandFlexentialwerethemostactiveprovidersinH12018.

• Whilethecurrentvacancyrateseemselevated,itrepresentsonly14.1MWofavailablecapacity.

• TheCharlotte-Raleighmarketisamongthefewinthenationwithcost-effectivelandavailableforadditionaldevelopment,aswellaslow-costpower.Thiscombinationbodeswellforfuturedemand.

Charlotte/Raleigh Net Absorption* 221.2%

Vacancy Rate* 25.3%

• H1absorptionlevelsmatchedhistoricalannualaverages,asprimarilyretailcolocationdealswerecompleted.

• Wholesaleoccupiersprimarilycamefromthehealth-careandtechnologyindustries.

• Constructionactivitytotallednearly12MW,withprojectsunderwaybyEdgeConnex,CoreSite,FlexentialandZayo.PlannedannouncementsincludeonefromIronMountain.

Denver Net Absorption* 55%

Vacancy Rate*23.4%





• AbsorptioninH12018wasmorethandoublethatofanyprevioushalfyear.

• Requirementsgreaterthan500KWcameprimarilyfromexpansionsbyhyperscalecloudprovidersandglobaltechnologycompanies.

• DigitalRealtyandSabeyDataCentershave2.5MWofcapacityunderconstruction.

Seattle Net Absorption* 177.3%

Vacancy Rate* 13.4%

• CoreSiterenewedits160,000-sq.-ft.leaseatOneWilshireandaddedanother17,000sq.ft.TherenewalextendedoptionsatCoresite’sLA1facilitythrough2044.

• CoreSitecommencedconstructionofa28,000sq.ft.turnkeydatacenteratLA2,whichis100%preleased.LA2nowisnearcapacity,andthecompanyhasplansforanLA3developmentthatwilldeliver18MWofcapacityin2019.

• Leasingactivityinthemarketwasprimarilyledbytechnology,entertainmentandhealth-carecompanies.

SouthernCalifornia Net Absorption* 173.7%

Vacancy Rate* 18.8%

• Houstonhadarelativelyslowstarttotheyear,asnewdevelopmentstalled.

• Primarilydependentontheoil&gassector,Houstonhasnewdemandfromhealth-care,transportationandcryptocurrencyoccupiers.

• CyrusOneremainsthelargestdatacenterproviderinthemarketwithmorethan48%oftheexistinginventory.

• DataFoundrycurrentlyhasalargeblockofavailablecapacity.

Houston Net Absorption* 257.1%

Vacancy Rate* 22.7%


H1 2018U.S. DATA CENTER TRENDS APPENDIX

Figure 13: Market Definitions

Term Definition

Powered Shells Purpose built or hardened shell; Power and Fiber to site; no equipment included.

Hyperscale Cloud Service Provider Multi-megawatt user, typically 5+ MW and larger.

Wholesale Colocation Building shell & infrastructure to PDU providing space, power & cooling; Generally in demised suites above 250 KW.

Retail Colocation Building shell & infrastructure in shared environment, space generally divided by racks or cages; may include IT hardware as well as a menu of services.

Hybrid IT A combination of cloud services, third-party colocation and owned, on-premise infrastructures.

Enterprise Data Centers Hardened data centers; houses "mission critical" operations of individual companies.

Data Center Net Absorption Net change in existing/commissioned wholesale power capacity.

Data Center Power Measured in kilowatts (kW) and megawatts (MW).

Appendix

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

Pat Lynch Senior Managing Director Data Center Solutions [email protected]

Michael Kane Senior Research Analyst Data Center Solutions [email protected]

Spencer G. LevyHead of Research and Senior Economic Advisor, [email protected]:@SpencerGLevy

TolearnmoreaboutCBREResearch,ortoaccessadditionalresearchreports,pleasevisittheGlobalResearchGatewayatwww.cbre.com/researchgateway.

AdditionalU.S.ResearchfromCBREcanbefoundhere.

FOR MORE INFORMATION, PLEASE CONTACT:


mailto:[email protected]

mailto:michael.kane%40cbre.com?subject=

mailto:spencer.levy%40cbre.com?subject=

https://twitter.com/spencerglevy

http://www.cbre.com/researchgateway

http://www.cbre.us/research/Pages/US-Reports.aspx

Documents

U.S. DATA CENTER TRENDS REPORT H1 2018 - CBRE€¦ · GTT’s fibernetwork footprint. 2. Iron Mountain’s acquisition of IO Data Centers for $1.3 $ Millionsbillion. The transaction