Northern California
data center market
continues supply-
demand balance

More Northern California data center capacity set to relieve tight market if projects now on the drawing board all come to fruition

March 23, 2020

Northern California’s appeal as a location for data centers continues unabated, especially among hyperscale cloud and tech users.

Total vacancy is just 10.1 percent throughout the entire data center real estate market in Northern California. Much of that vacancy is in older, second generation-plus turnkey space. Operators have only to look to vacancy rates in newer turnkey space (2.5 percent) to see that backfilling older generation space isn’t likely unless it can be redeveloped or quickly upgraded.

For cloud and tech users, though, some help is on the way in the form of 1 million square feet (MSF) currently under construction. That will increase the total Northern California data center real estate market, currently 5.89 million square feet (MSF), by about 16 percent. Putting that into a capacity perspective, the current market capacity is 442 MW. New construction would add about another 100 MWs by the end of next year.

Supply snapped up by preleasing

That sounds like a major increase, but it’s important to note that a large percentage of this capacity is preleased. In 2019, operators delivered 57MW to the market, 77 percent of which was preleased. The market also absorbed roughly five times as much data center capacity (49MW) last year as it had historically (10-15MW per year average). Right now, there’s not much sign of that abating.

Bottom line: demand, driven by major cloud and tech companies, is strong. Beyond the 100MW new capacity to be delivered by next year, there is also 4MSF of planned construction in various stages of development. If all these projects end up delivering, this will double the size of the Northern California data center real estate market by 2025. It will also more than double capacity, adding over 500MW.

Below, click the "+" to learn more about key Bay Area 2019 year end statistics received prior to COVID-19:

  • Silicon Valley/Santa Clara: 39 MW
  • San Jose: 1.5 MW
  • San Francisco: 0 MW
  • Sacramento: 8 MW
  • Silicon Valley: 63 MW
  • San Jose: 10 MW
  • San Francisco: 0 MW
  • Sacramento: 24 MW
  • Silicon Valley/Santa Clara: 465 MW
  • San Jose: 107.5 MW
  • San Francisco: 0 MW
  • Sacramento: 21.5 MW
  • Silicon Valley/Santa Clara: $0.11
  • San Jose: $0.16
  • San Francisco: $0.16
  • Sacramento: $0.12

Santa Clara dominates

The epicenter of the region’s data center market remains Santa Clara, where the turn key vacancy rate is 5.9 percent and 78 percent of new capacity, 465MW, is set to deliver.

Santa Clara’s location in the midst of the Silicon Valley tech cluster is one obvious reason for its popularity as a data center market. Another is the reliability of local power utility Silicon Valley Power. SVP is not only one of the lowest cost providers in the region, it also operates one of the densest utility grids in the nation with substations roughly every half mile throughout the city.

For more on this and other data center-related topics, visit our latest data center report:

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