Secondary Market: Southern California

Colocation Insights

• The future development pipeline grew, as data center expansion plans are being finalized to provide multi-MW opportunities to support hyperscale demand.
• With continued limited development opportunities in the downtown core, new development interest pushed into the suburbs.

Market Trends

• Absorption exceeded 14 MW for the year.
• Pricing has remained relatively flat. It is in-line with market vacancy but expected to increase until new capacity is delivered.
• Over 95% of the capacity under construction has been pre-leased.
• Most leasing transactions were from enterprise customers driven by interconnection requirements, but interest from hyperscalers continues.
• Expect active leasing activity in Q1 2023, as several deals were pushed to this quarter.

Notable Activity

• Serverfarm and Prime Data Centers have significant construction underway in support of pre-leasing activity.
• Equinix delivered new capacity in El Segundo.

Figure 1: Historical Market Information

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 2: Historical Supply and Demand

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 3: % of Total Secondary Market Inventory

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 4: Market Fuel Mix

Source: Southern California Edison.
*Includes solar, wind, geothermal, biomass and small hydro.

Figure 5: Average Asking Rates

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.