The North American colocation datacenter market is experiencing unprecedented demand, with occupancy rates hitting an all-time low of 2.6%. Despite 6.6 GW of colocation capacity under construction, 72% of it is already preleased, leading to a challenging environment for companies seeking space. Tenants are facing long wait times of about 24 months and skyrocketing lease rates, with increases of up to 50% for renewals. Despite these pressures, the trend is not pushing companies back to self-hosting datacenters, as alternatives remain limited.
"In 2024, colocation absorption in North America totaled 4.4 GW. Given that vacancy is near 0 percent, virtually all absorption was preleasing activity."
"For companies approaching the end of a five-year lease, market rents have easily increased 50 percent. Additionally, landlord concessions such as phasing, TIs and ROFOs are no longer on the table."
"The only alternative is self hosting. And we don't see a whole lot of shifting back to that mode."
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