Data center capacity in Asia, North America grew 10% in H1

Total data center capacity grew 10% in the first six months of the year in both North America and Asia-Pacific, new research shows.

North America added 515MW in fresh capacity, while the construction volume soared 70% higher over last year, CBRE said in its biannual survey. Northern Virginia, by far the biggest market, added 357MW in fresh capacity to take its total to 2.61GW. The next biggest, Dallas-Fort Worth, added 91.6MW to record a new capacity level of 591MW.

In Asia-Pacific, a Cushman & Wakefield study found 11.6GW of capacity in operation as of June 30 after adding 1.3GW in the first half in what it says is the biggest expansion in recent times. Another 4.2GW is under construction, with a total of 12GW in the planning stages – a 2.8GW hike over December 2023.

Malaysia is the region's fastest growing market, with operational capacity expanding by 80%, mostly in Johor Bahru, adjacent to Singapore. India recorded the second-fastest growth of 28%.

Record low vacancies

Despite the strong growth, Asia-Pacific has so far not felt the same impact of AI experienced by the US, Cushman & Wakefield said.

CBRE said AI and cloud growth is putting a squeeze on prices and vacancies in North America. Demand has driven the vacancy rate in leading markets to a record-low 2.8% in the first half, down from 3.3% a year earlier, while prices have increased by an average 7%. In secondary markets such as Denver, Seattle and Austin, the vacancy rate dropped to 9.7% from 12.7% a year ago.

By comparison, vacancy rates in major Asia-Pacific markets range from 8% in Tokyo and Sydney to 19% in Hong Kong. The exception is Singapore, which has just lifted a moratorium on new data center builds, and which has a 1% rate.

CBRE said it expects increased investment volume and sales transactions in the second half of 2024.

However, it warned that the growing demand for high-power computing "is creating a significant price disparity between new data centers and legacy facilities. Many existing data centers lack the infrastructure to handle these demanding workloads, further limiting their appeal."

A research note from analyst firm Synergy Research reveals that data center M&A is also escalating and is likely to top $40 billion in total value this year. So far deals worth $36.7 billion have been completed, with another $7.1 billion agreed but not yet formally closed, the company said.

But it adds that the current deal pipeline could be worth more than $20 billion, suggesting the final 2024 M&A figure could overtake the $50 billion record seen in 2021.