Cushman & Wakefield Insiders Discuss the State of Seattle Data Center Market
SEATTLE, WA – CapRE’s Fourth Annual Greater Seattle & Pacific Northwest Data Center Summit was a full day of first-class data center analysis. One of the central panels of the day, “Connectivity Innovations in the Pacific Northwest: Exploring the Growth of Sub-Sea Cables and Fiber Improvements” kicked off with some remarks by a pair of industry leaders from Cushman & Wakefield, which situated the local connectivity discussion within the broader national conversation.
“From a real estate perspective, I’m going to present some basic statistics about the Pacific Northwest and Seattle market,” offered Moderator Gene Williams, Senior Director & Data Center Valuation Practice Group Leader. “The inventory of space, which is the chart you’re looking at, is growing at about 3%. This is multi-tenant whole space. it does not include enterprise or specific colocation builds. And just from that perspective, the Seattle market has just moved over a million square feet. It’s a slow-growth market and it’s kind of expected to stay that way for awhile.”
“But as you can see, in 2016, 2017 and 2018, new construction or new deliveries to the market have been pretty significant,” he continued, referring to the slide below. “Utilization is up, around 70%, in spite of that construction because in the lighter color, you can see that the take-up or the absorption of that space has been pretty strong.”
“As with a lot of West coast markets, Seattle pricing has been pretty stable,” offered Williams. “It has dipped more recently, due to completion, which was expected. But pricing has been very stable in the 250-kilowatt and above wholesale market.”
At that point, panelist Kevin Imboden, Director of Research for CushWake’s Data Center Group chimed in. “I think that some of this can change over time. We have very dense fiber in downtown Seattle and there are a lot of key points here,” he shared. “But now a lot of regional competition is coming online too. In the Portland market, the suburb of Hillsboro, a lot of providers have already bought a good amount of land. And planning enormous developments there. And that has now become a bit of a regional competitor. Of course, there is what’s going on central Washington, which has been going on for several years, which has the cheapest power.”
“So I think [the next best step] going forward for Seattle would be to building up the downtown quarter,” he advised. “It would have to be multi-story if you’re going to do it. There is one in planning literally just down the street that I walked by today. And again, it’s going to have to be sort of a choice of whoever is going to develop here, who they can get as a client and what their client’s trade-offs would be for cost and power needs.”
Banner Photo (L): Kevin Imboden, Director of Research – Data Center Group, Cushman & Wakefield