BOSTON– Several major cloud providers plan to provide local cloud resources in Great Boston that could make them the dominant consumers of space in 2021 and beyond, according to CBRE’s latest North American Data Center Trends Report.
Boston finished 2020 with 77.8 megawatts (MW) of inventory, unchanged since the end of 2019, as data center development activity was stagnant in the region. Vacancy rates dropped 470 basis points to 16.5% at the end of H2 2020, due to a 1.2 MW increase in absorption year-over-year.
“A minimal amount of construction is underway in Boston and providers are expected to concentrate on filling vacant space with existing customer expansions and continued outsourcing of legacy data centers,” said CBRE’s Rich Modliszewski, who specializes in data center and telecommunications brokerage in the Greater Boston Area. “In H2 2020, due to subsea cable activity, a large content company expanded by 500kW, and a third subsea cable is scheduled to go live in Q1 2022.”
National Trends
Data centers, one of the fastest growing real estate sectors pre-pandemic, remained strong in 2020 as businesses reconfigured their digital infrastructure to improve their remote work capabilities, and tech giants and cloud service providers raced to meet consumer and corporate demand, according to CBRE.
The firm’s latest research shows 329.6 MW of net absorption in 2020 across the seven primary U.S. data center markets. While down 11 percent from the peak in 2019, 2020 absorption was still higher than any other year on record. Meanwhile, vacancy fell to just 8.5 percent, despite an 11 percent growth in new supply.
“With data usage growing at an explosive rate, we expect data center demand to increase across both primary and secondary markets in 2021,” said Pat Lynch, Senior Managing Director, Data Center Solutions, CBRE. “To capitalize on this growth, data center providers will look to deliver network and interconnection offerings to better connect business-critical applications, as well as to meet anticipated demand for evolving technologies like 5G, Edge computing and the internet of things—all of which will further fuel the data center real estate market.”
Top North American Data Center Markets
Top 10 Most-Active Markets:
| Market | 2020 Absorption | Market | 2020 Absorption |
| Northern Virginia | 217.2 MW | Phoenix | 17.5 MW |
| Toronto | 38.1 MW | Central Washington | 14.5 MW |
| Dallas-Fort Worth | 33.7 MW | Chicago | 13.1 MW |
| Silicon Valley | 26.6 MW | Montreal | 11.0 MW |
| Atlanta | 18.2 MW | Seattle | 6.9 MW |
Strong demand and an uptick in investor interest in direct investment due to the strong performance of data center REITs in 2020 resulted in a 457.8-MW data center construction pipeline in the primary markets, up 62 percent from the end of 2019. More than half of the current pipeline is pre-leased.
The markets with the most data center space underway include Northern Virginia (283.5 MW), Montreal (57 MW), Silicon Valley (50.1 MW), Central Washington (43.7 MW), Hillsboro, Oregon (40.5 MW), and Chicago (33.7 MW).
