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A Source of Stability: Digital Infrastructure in 2020

North American Data Center Report H2 2020
March 8, 2021

The data center sector is benefiting from the increased priority that businesses have placed on digital infrastructure and technology innovation in the wake of COVID-19. This report provides an in-depth review of the data center market with insights on supply and demand, pricing and valuations, capital markets activity and trends to watch in 2021.


Key Takeaways


  • Demand for wholesale data centers in primary U.S. markets fell by 11% year-over-year in 2020, largely due to companies’ temporarily freezing IT budgets to reevaluate their digital infrastructure.
  • Supply across primary markets grew by 5.9% in H2 2020, bringing their total overall colocation footprint to more than 2.8 gigawatts (GW).
  • More than 457MW of capacity was under construction across primary markets at year end, with Northern Virginia accounting for 61% of the pipeline.
  • A need for highly connected sites with cloud on-ramps is driving new demand, some of it from enterprise data centers that lack this connectivity and flexibility.
  • Data centers with robust network infrastructure are well positioned to meet the anticipated future demand of emerging Edge, 5G and IoT initiatives.
  • A slowdown in new supply last year vs. 2019 enabled prices to stabilize in primary markets, while asking rents continued to decline in secondary markets.
  • The strong performance of the publicly traded data center REITs helped to spur an uptick in investor interest in buying assets directly. With more investors targeting data centers and limited opportunities of scale, yields compressed.
  • Data center providers are increasingly adopting environmental, social and corporate governance (ESG) practices with a heightened focus on power sources that support corporate assets.

Related Research

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