Global data centre real estate analysis platform, datacenterHawk, has released its 4Q 2022 Data Center Market Recap, which shows that market growth set a record pace in 2022, bolstered by strong demand in 4Q 2022. This follows their 3Q 2022 recap, which observed the high demand and supply chain challenges facing the data centre market.
The datacenterHawk team relies on its proprietary standardised methodology to provide real time data that allows subscribers to discover, track and compare trends and pricing from over 35 individual markets across North America, Europe, and APAC regions. Their data and analysis are detailed in datacenterHawk’s comprehensive summary, which details the current trends and challenges across the data centre sector’s major markets.
“The historic growth, trends and challenges made 2022 a fascinating year to analyse in the data centre industry. We saw new markets emerge, and major ones forced to navigate unique obstacles,” commented David Liggitt, datacenterHawk’s President. “With the new year, we anticipate new challenges will surely come with it, be it in the form of new legislation or restrictions, and low vacancy, while demand continues to remain historically high. As datacenterHawk continues to observe the market in 2023, we will be keeping a keen eye at how industry players navigate high demand, and potential limitations in key markets.”
The North American market began and ended 2022 with the two largest periods of absorption in history. This record setting level of demand has left the industry also facing the lowest vacancy rate in history. With limited supply available for large-scale leasing, companies must often pre-lease infrastructure in large quantities, causing providers to develop their land inventory faster than anticipated. As a result, some markets find themselves with a limited supply of land suitable for development and power infrastructure installed to meet demand.
In Atlanta, Chicago, Dallas, Northern Virginia, Phoenix, and Portland specifically, the market grew by a large margin, in large part due to their favorable costs and available real estate. Other markets where development is more heavily regulated and restricted saw less growth, such as Northern California. Looking ahead to 2023, while it is unlikely demand will decrease, datacenterHawk predicts that growth will be somewhat subdued.
The European market saw another year of growth, with total absorption in major markets doubling its 2021 mark. Hyperscale demand is high, leading to the rapid absorption of large projects in major markets. Similar to North America, major European markets have a limited supply of power and land suitable for development. As a result, secondary markets have continued to emerge across Europe, including Milan, Madrid, the Nordics, Zurich, and Berlin, where power is in larger supply.
Dublin’s absorption and demand for data centre infrastructure is particularly high, however the power supply is limited. The limit of available power in Dublin and Amsterdam has also seen Paris benefit, as some activity that would have occurred in those markets has turned to France. Moving forward, the European Union is in the process of implementing new legislation to regulate how data centres are built and operated, which is sure to impact the market in 2023.
Meanwhile, growth across the APAC region was widespread in 2022, due in part to the broad demand across the region and the geographic nature of the region limiting the creation of one central communication hub. Development continued in major markets including Singapore, Hong Kong, and Tokyo, though power constraints, a lack of land, and generally higher development costs limited overall development in those markets. Development is also on the rise in the South Pacific, with multiple projects underway in Perth, Melbourne, Canberra, and Auckland from data centre providers and hyperscale companies. With some development opportunities limited in Singapore and Hong Kong, many markets are positioned to emerge in 2023 as vital communication hubs in the Pacific.