Newmark – 2023 U.S. Data Center Markets, 2023

The report by Newmark's report on the 2023 U.S. Data Center Markets highlights the crucial role that data centers play in supporting the growing digitalization and data-driven technologies in our interconnected world. These mission-critical facilities store, process, and distribute massive amounts of data that are essential to businesses, governments, and individuals globally. The rapid growth of emerging technologies like Artificial Intelligence (AI) is driving the demand for data center capacity, which has already been increased by digital innovations such as content streaming, cloud computing, machine learning, Internet of Things (IoT), and e-commerce over the past decade. Unlike other commercial real estate sectors, data center development is at an all-time high and is expected to continue growing to meet the demand. However, this growth is facing challenges such as limited land and power availability, supply chain issues, construction delays, and resistance from some local jurisdictions. Newmark's report provides a comprehensive analysis of the national data center market, including key regions, transactions, market activities, and future outlook. The data center industry has witnessed significant growth due to the expanding needs of major corporations, colocation operators, and specialized providers. Global spending on cloud infrastructure services in the third quarter of 2023 exceeded $68 billion, marking an 18% year-over-year increase. This heightened demand has led to a surge in new data center development and landbanking for future projects. Meanwhile, other commercial real estate sectors are witnessing a slowdown in construction due to the economic downturn and difficulties in obtaining construction loans. The report also highlights the increase in merger and acquisition activity in the data center sector, with record-breaking deals in recent years. However, the M&A activity in the sector has declined in the past twelve months.