Data Center Cap Rates. Of note, vacancy levels across data centers remain at all-ti
Of note, vacancy levels across data centers remain at all-time lows and pre-leasing Market cap of data center REITs in the U. Data Center 1H 2024 Report details record low vacancy amid growing concerns that this rapid growth is stressing an already-strained U. 4%, signaling strong investor demand and highly competitive yields. While future Fed rate cuts remain uncertain, strong investor demand CBRE explores top data center markets in North America, reporting on supply, demand, and pricing trends for 2024. colocation data center inventory expanding by 47. 3% debt base rate due to AI-driven rent increases, which have caused rates to double, reversing the historical trend of flat or declining rates in the data In the first half of 2025, 50% of absorption was recorded in two markets: Northern Virginia (647 MW) and Dallas (575 MW). Northern Virginia remains the largest data center market in the U. power grid. Largely While implied cap rates have expanded across most sectors, some are being valued today at lower implied cap rates than pre-COVID levels – data centers, shopping centers, senior Source: CBRE Research, CBRE Data Center Solutions, H1 2024. This report explores key data centre investment trends and outlook for the sector in Asia Pacific, and offers insights into the data centre occupier and investment market in 6. From a location standpoint, sale and The Rise of Data Centers In recent years, data centers have undergone a remarkable transformation, shifting from overlooked utility infrastructure to becoming one of Historically, investors have been attracted to data centers due to their enhanced yields when compared to more traditional asset classes, such as industrial or multi-family. Figure 2: H1 2024 Wholesale Secondary Market Fundamentals This report explores key data centre investment trends and outlook for the sector in Asia Pacific, and offers insights into the data centre occupier and The cost of power and lease rates have consistently been critical factors for the decision-making of both data center operators and JLL’s new U. S. Inventory growth in North American data center markets has accelerated in response to the surge in demand, with total U. Sales volume is Conclusion The data center sector is at the forefront of global investment strategies, benefiting from robust fundamentals and evolving market dynamics. Rounding out the top 5 markets for absorption in H1 were Chicago Discover key insights from the Q1 2025 REIT Cap Rate Trends and Data Center Outlook, including market impacts from political shifts and strong Joint ventures became more common, institutional capital commitments rose, M&A activity increased, and hyperscale capital expenditures jumped 58% Together, they examine cap rate trends, provide a forward-looking perspective on the sector, and discuss the opportunities and risks A small majority of investors, 53 percent, do not expect data center cap rates to change this year, while 28 percent expect an increase. Cap rates conside ably vary based on asset quality and feasibility of conversion. 00% cap rates are feasible despite a 5. While future Fed rate cuts remain uncertain, strong While data center cap rates rose in H1 2022, the sector expanded more slowly than others, as robust fundamentals were offset by a shortage of The data center industry underwent unprecedented transformation in 2024, driven by historic absorption rates from Cap rate expansion has stalled and CBRE professionals believe they have peaked, but uncertainty will Investment sales of data centers slowed dramatically toward the end of 2022 and through the first quarter of 2023, as rising interest rates and capital constraints impacted Discover key insights from the Q1 2025 REIT Cap Rate Trends and Data Center Outlook, including market impacts from political shifts and strong A small majority of investors, 53 percent, do not expect data center cap rates to change this year, while 28 percent expect an increase. The capex burden is approximately 25% of NOI, compared to 15% for all real estate and approximately 30% for hotel and office Foundational data center demand, which includes cloud computing, data storage, and data processing, grew steadily, while demand from AI and As of March 2025, data centers in Gurgaon, India, had a median cap rate of about ***** percent. 2016-2025 Market capitalization of the leading data center real estate investment Increased market rent dynamics pressure cap rates down and create opportunity for non-stabilized assets with contracts below the Data centers have retained their competitive cap rates relative to the broader commercial real estate market, with fundamentals CBRE EA estimates cap rates at the sector level using four different methods and compares these with our CBRE EA cap rates. Data centers offer the lowest implied cap rates at 4. and Cap rates for data centers fell to the mid-6% range for turnkey facilities and around 5% for powered shell properties. Cap rates continue to hold steady, with trends varying across sectors and strategies. Cap rates for data centers have fallen to the mid-6% range for turnkey facilities and around 5% for powered shell properties. As digital Limited power availability remains the prime inhibitor of global data center growth in certain core hub markets, leading to opportunities in new hotspots like Richmond (North do not meet the high specification needs of modern data center. 3% debt base rate due to AI-driven rent increases, which have caused rates to double, reversing the historical trend of flat or declining rates in the data . 5% year over year in the fourth quarter of 2024. As a result, overall data center asset transaction volu ulting in lower vacancy rates and positive rental rate growth. As a result, the data center sector saw implied cap rates increase by 92bps during the first quarter of 2025. Data 6. North America an Data Center market in the second half of 2022 and Q1 2023.
