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Silicon Valley Data Center Market Challenged by Limited Supply

The Silicon Valley data center market continues to grow, but momentum has slowed in the first half of 2023 because of economic challenges and limited supply, CBRE says in a new report.

Silicon Valley inventory was 410.7 megawatts (MW) in the first half of 2023, up 10% year-over-year. Vacancy increased to 6.4% in H1 2023 from 2.3% in H2 2022, but rental rates remain among the highest in the country.

In the first half of 2023, Silicon Valley reported 125 MW under construction, up 24.4 MW from H1 2022. Almost 60% of new construction was pre-leased.

“While vacancy and inventory increased, Silicon Valley’s data center market remains among the tightest in the country,” said Jerry Inguagiato, SVP at CBRE. “Power constraints and aging supply in the region severely limit desirable options, keeping asking rental rates high. Newly constructed data centers are quickly pre-leased, underscoring the demand for state-of-the-art facilities.”

Connect Orange County will take place Sept. 27, 2023 at VEA | Newport Beach Marriott in Newport Beach, concurrently with Connect Healthcare Real Estate on Sept. 27 and 28. Click here to register for Connect Orange County, and here to register for Connect Healthcare Real Estate.   


Inside The Story

CBRE's Inguagiato

About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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