Northern Virginia achieved a record for data center absorption in 2022, according to the latest North American Data Center Trends report by CBRE.
The world’s largest data center market recorded 436.9 megawatts of absorption in 2022, beating its previous record of 311 megawatts set in 2021. It also had the highest absorption rate of any market in the country.
(Data center absorption is measured in megawatts, not square feet, because capacity is dependent on technology in addition to space.)
“The unrivaled connectivity and infrastructure that exists in Northern Virginia continues to drive demand,” Jamie Jelinek, a senior vice-president at CBRE, told Commercial Observer (CO). “Major cloud providers continue to fuel the majority of this growth.”
NoVA’s vacancy rate dropped to under 1 percent, despite significant power constraints and land restrictions.
“Data center providers know that any capacity or supply brought to market will be leased,” Jelinek told the business pubication. “Many providers continue to look for sites as close to Loudoun as possible with short timing to power, but sites that fit this profile are virtually nonexistent.”
One challenge has been that Dominion Energy, the main supplier of power and electricity in the state, does not have enough capacity in the area.
“The next big milestone for the market will be when Dominion delivers new utility capacity, which is expected in 2026, given many of the data center providers’ projects were put on hold due to a lack of power.”
Still, there are several projects that do have power and will deliver over the course of the next 24 months, almost all of it preleased.
From a land constraint perspective, CBRE continues to see data center providers and large end-users get more creative and pursue covered land development sites.
“We’ll also start to see Prince William [County] gain more traction as an active submarket given the infrastructure and existing data center ecosystem in that market,” Jelinek said. “Demand will always remain for Ashburn and Loudoun, but low vacancy will provide new opportunities for other submarkets to capture the overall region’s growth in moments when Loudoun hovers near 0 percent vacancy.”