Social Media Giants Catapulting Data Center Leases To Massive New Heights

Propelled by social media giants, data center "mega-leases" are ballooning to sizes that would have been unthinkable just a few years ago.

In another strong year for data center leasing activity, 2021 saw Meta, TikTok and Twitter sign the 11 largest leases of 2021 — all at sizes that would have been unheard of just three years ago, according to a report by data center consultancy North American Data Centers.

Meta inked the year’s largest deal, a massive 80-megawatt lease in Manassas, Virginia, with provider Cloud HQ.

“To accommodate these mega-leases, developments need to be much larger in the future,” wrote Jim Kerrigan, North American Data Centers’ founder and managing partner, and the author of the report. “Winners will be those developers that build speculatively and can provide immediate plug and play solutions.”

The report paints a dramatic picture of a leasing market that has exploded in scale in just a few short years. In 2017, there were just six leases signed for more than 10 megawatts of data center space, and not a single one of those deals exceeded 25 megawatts. In 2021, by comparison, 11 different leases were for 30 megawatts or more, with an additional six reaching 10 megawatts. 

While cloud providers like Microsoft contributed to this boom in large leases in the past, 2021 saw social media companies account for the 11 top leases, with Meta at the forefront. In addition to its chart-topping deal in Virginia, the company formerly known as Facebook accounted for more than half the leases over 30 megawatts. As Meta builds out the infrastructure to support its shift toward the metaverse, the report anticipates the company will continue to drive the leasing market through at least the end of the year. 

Twitter signed the second-largest agreement of 2021: 48 megawatts at a Digital Realty facility in Oregon. TikTok inked three deals around 30 megawatts, all in Virginia. 

According to the report, overall multi-tenant leasing activity in 2021 was as strong as in 2020. In addition to the enormous leases signed by social media companies, the report attributes the continued leasing boom in part to new products rolled out by the major cloud providers, such as regional clouds and industry-specific offerings.

“Developers with built-out data centers are able to fill in the gaps to meet the short-term needs of those companies [that] otherwise do not have time to build on their own campuses,” Kerrigan writes.  

Major cloud providers' major leases in 2021 were near major urban areas, as companies like Microsoft and AWS build out their infrastructure capacity closer to concentrations of customers. 

Microsoft’s largest lease of the year was a 15-megawatt deal in Phoenix with provider Edgecore. AWS leased 4.5 megawatts from QTS in the heart of Chicago, along with 6 megawatts from NTT a stone’s throw from Chicago O’Hare Internation Airport. 

Unsurprisingly, Northern Virginia was the top region for leasing, followed by the Portland and Hillsboro areas in Oregon.