An explosion in demand for data center space has pushed leases in North Texas to record levels.
Net leasing rates for high-tech facilities in 2023 were seven times higher than in 2020, prompting developers to bring new data centers into production in Dallas-Fort Worth, according to a new report from commercial real estate firm Cushman & Wakefield. It is in a hurry. Last year, the region absorbed 386 megawatts of data center space.
At year's end, less than 4% of D-FW's current data center space was available.
D-FW is the second largest data center market in the United States after Northern Virginia.
“Data centers are the backbone of our economy and daily lives, from cloud computing that supports remote work and collaboration to the ever-present mobile devices and social media,” said Ari, executive director of Cushman & Wakefield.・Greenwood stated in the report. “With continued strong growth expected, the D-FW market will continue to be a leader in the data center space, but it is not without challenges, especially when it comes to utility constraints.”
Cushman & Wakefield estimates that an additional 1.4 million square feet of data center space is under construction in North Texas. And most of what is under construction is already leased.
Driving demand is the growing use of cloud computing and the rapid adoption of artificial intelligence and machine learning.
“Data centers are now the highest-performing asset class in commercial real estate, with billions of dollars of institutional and private Capital is being allocated to new development and investment.” “Although permitting and development is a complex process, data centers cannot be built fast enough due to regional and global demand.
“Dallas-Fort Worth has the largest concentration of new development in the southern sector of the region and will capture more than its share of that investment,” he said.
Oncor, the region's electricity provider, announced a huge investment to “meet the demand for cloud, AI and machine learning technologies that other utilities across the country lack,” Bond said. Ta.
Data centers are the most profitable area of commercial real estate. According to the latest report from the real estate investment trust industry, developed data centers will have an average return of nearly 30% in 2023.
Several large data center projects are under construction in North Texas.
Dallas-based Databank plans to expand its Plano data center at 8735 Dominion Parkway to 265,000 square feet for $280 million, according to planning documents filed with the state. is standing.
Skybox Datacenters and developer Bandera Ventures are building a data center campus on a 100-acre site in Lancaster near Interstate 35E.
Addison-based Compass Datacenters is expanding its more than 500-acre data center campus near Interstate 35E in Red Oak.
In August, Google announced plans to build a more than $600 million data center in Red Oak, south of Dallas. The first phase of the project will be approximately 285,000 square feet.
