Silicon Valley Data Center Market Remains Robust

In spite of increasing costs for power and land, the data center market in the San Francisco Bay Area remains robust and growing, Cushman & Wakefield reported. Although vacancies have crept upward over the past six months, they remain under 5%, suggesting a fairly tight market.

Absorption-wise, the first half of 2023 saw a respectable 79 megawatts of leasing, nearly double that of the first half of the year. “Power availability, as in other markets, has been challenging with utility providers having limited capacities of the needed size for the large developments currently in planning,” according to Cushman & Wakefield’s latest Americas Data Center Update.

Lease pricing in the market has seen some of the largest jumps in the country, with a 42% increase in hyperscale pricing over the course of the past year, with similar increases for wholesale and retail rents. The upward movement in pricing is reflected only slightly in vacancies, with vacancy edging between 4.3% to 4.9%.

“Going forward, Silicon Valley looks to continue to rise above a challenging land and power situation to remain a top market in North America,” according to the report.

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