DFW Data Center Market Thrives Despite Pandemic-Related Slowdown

The Dallas-Fort Worth data center market holds high hopes for 2021 after the sector ended the fourth quarter of 2020 with a surge in enterprise demand that helped overall absorption activity, a new study from CBRE’s Data Center Solutions says. 

Net absorption during Q4 reached 8.8 megawatts, which is the measure of energy output by a data facility. The overall vacancy rate for Q4 came in at 15.8% with total inventory levels at 531.3 MW, CBRE reported.

"Q4 absorption was largely driven by the signing of wholesale deals by a social media company and a financial services company," CBRE data analysts said in the report. 

Activity in 2020 was down overall, with net absorption of 34.43 MW for the year in the colocation market. The DFW colocation market averages 40-plus MW a year. 

Data demand for the entire year came in under the annual average mainly due to a stall in the market during the second quarter, CBRE said in its report on the first half of 2020 last summer. 

The pandemic outbreak caused companies to delay some absorption activity due to budgetary freezes and economic uncertainty in Q2 2020, which saw only 2.93 MW of net absorption. 

Leasing velocity picked up as the year unfolded and companies became used to the new normal, and Q4 activity more than doubled the absorption recorded in the second quarter. 

The sector is heading deeper into 2021 in a solid position with several new transactions expected to close as companies move to the area, bringing their data requirements with them, CBRE said.

These new data transactions are expected to help supply and demand levels reach a closer equilibrium in the coming months.