Originally posted on Data Center POST
With the rising demand for data center expansion, many in the digital infrastructure sector are beginning to experience the effects of capacity constraints. As more facilities enter the market, the Chicago metropolitan area is one to watch. Chicago has long been praised for its cloud availability, fiber connectivity, development pipeline, land price, and market size. The Midwestern city is also viewed as one of the nation’s premier data center and colocation infrastructure markets.
Chicago remains an optimal location to build and operate data centers for its many advantages. Providers can leverage the cold climate to save on cooling costs in the Windy city, channeling outside air to supplement cooling systems for more months of the year than other locations. Chicago also offers a centralized location equally accessible from the East and West coast. Plus, Chicago rests at the apex point of a world-class fiber infrastructure while remaining a low risk area for natural disasters.
The growing hyperscale demand for multi-tenant data center facilities was a driving force of new construction in Chicago. An updated report from Cushman & Wakefield reports that the city has experienced a string of consistent construction completions, which led to more capacity for hyperscalers to obtain in the second half of 2021. The outcome has been a record 65 megawatts absorbed across Chicago, tightening overall market vacancy. In 2021 the market had nearly 310 MW of inventory with a vacancy rate of 11.7% compared to now, which is seen at just 7%, returning to an all-time low.
According to Craine’s Chicago Business, the demand for data center space is strong enough that developers should be able to lease up projects with a lot of power capacity, says broker Jim Kerrigan, managing principal of Chicago-based North American Data Centers. Data center leases have become bigger in recent years, with more tech companies seeking 30 megawatts or more deals. In 2017, U.S. data center landlords completed six leases of 10 megawatts or more, and in 2021 they cut 11 leases of 30 megawatts or more.
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