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Data Center Inventory In Chicago Races Forward In 2018

A close-up of a data center server bank

Demand for Chicago-area data centers has been brisk in the last year, as large cloud users and tech companies need ever more space in the market, according to CBRE’s latest U.S. Data Center Trends Report. But supply has grown even more briskly.

During the first half of 2018, the Chicago market saw data center inventory grow by 56.6 megawatts over the first half of 2017. 

That is a 30% increase in total inventory year over year. Moreover, development continues apace in the metro area.

The new inventory pushed vacancy up from 2.5% in the first half of 2017 to 11.2% in the first half of 2018. With a total inventory of 245 MW, Chicago remains the third-largest data center market in the country, behind only northern California and northern Virginia.

“While the increased vacancy rate might lead some observers to assume the Chicago market is in decline, history has shown that large increases in quality supply are ultimately very good for the overall growth of a market," CBRE Data Center Solutions Practice Leader Todd Bateman said.

That is, a market needs capacity to attract additional space users, a point made recently at Bisnow's Chicago Data Center event.

"All indications are that the same will hold true for the Chicago market,” Bateman said.

Nationally, demand from large cloud users has set the U.S. data center market on pace to break 2017’s record leasing activity, the report found. 

The market saw more than 177 MW of net absorption in the first half of 2018, already nearly two-thirds of last year’s annual record net absorption total, despite the delivery of significant new supply, the report said.