In 2022, the Dallas-Fort Worth data center market hit a record amount of absorption, with more than 272 MW let to a wide range of industry verticals, including cloud, social media, financial services, and insurance companies. This is the largest amount of absorption since inception.
The market also experienced a land rush in the southern sector of Dallas County for all asset types, including data center. Rising costs of capital will upset this trend and could slow speculative developments in the region in 2023. However, DFW enters 2023 with a robust development pipeline, with 255 MW currently under construction, including both enterprise and hyperscale builds, the second highest in the U.S. behind Northern Virginia.
High demand from hyperscale and enterprise users has pushed the vacancy rate below 7.5%, with much of the vacancy consisting of second and third generation data center space. Despite the strong development pipeline, vacancy rates will remain low as developers tailor their expansion plans, often pre-leasing full buildings before kicking off future construction.
With vacancy evaporating and the stalling of new development starts, rents will likely increase at a moderate pace throughout the year. For 2022, average wholesale stating rental rates were $95 / kW +E, and the average power rate was 5.8 cents / KWH.
Dallas’ data center market continues to feature solid performance metrics that are tried and true, yet retain a number of options for expansion and new entrants, ranking No. 8 globally in Cushman & Wakefield’s Global Data Center Market Comparison.
For more, read our recent Americas Data Center Update.