Silicon Valley Data Centers Are Harder To Find Than Ever

Silicon Valley is the most active data center market in the country outside of Northern Virginia, which is far and away the biggest hub for data centers in the country, according to a recent report from CBRE.

Silicon Valley data center tenants absorbed 56.2 megawatts in the first half of 2022, outstripping the third-place market, Phoenix, by 10 MW. Northern Virginia, by comparison, took 269 MW.

But Silicon Valley’s data center vacancy rate is the lowest in the U.S., hitting an all-time low of 1.3% in the first half of the year, a slight decrease from the first half of 2021’s 1.6% and a big drop from 4.8% in the same period in 2020. 

Accordingly, rents for data centers in Silicon Valley carry a hefty premium over those in other parts of the country. Rates across Silicon Valley averaged between $150 and $175 per kilowatt per month, the highest in the country, according to CBRE.

Just over 100 MW of new data center development is in the pipeline in Silicon Valley, but there are challenges for new projects in the area.

A lack of available land and power delivery challenges have developers looking to the East Bay for new sites, and developers are land-banking sites while waiting for power delivery, according to the report. 

Even with these challenges, the market grew by 56 MW in the first half of 2022.

Developers added 352.9 MW of new supply in the seven primary data center markets across the country through June, an increase of 20% compared to the same period a year earlier.

Supply chain disruption is one of the biggest roadblocks for data center developers, leading to slower deliveries as unexpected delays hamper construction times.

To learn more about the data centers market in the Bay Area, consider the Bisnow DICE West event on Nov. 30.