US data centre market set to welcome 17.3% increase in inventory by 2020
New data centre capacity in the primary U.S. markets is set to increase these markets’ total inventory by 17.3% this year, and increase competition among providers in certain markets in 2020.
According to CBRE, the integration of 5G and Edge deployments into data centre users’ portfolios in the coming year may result in an uptick in demand in secondary and tertiary data centre markets.
It was also revealed that the US economy will continue its long expansion in 2020, and will support the solid fundamentals of the commercial real estate market, according to CBRE’s forecast in its 2020 Real Estate Market Outlook report.
CBRE foresees tempered growth in the U.S. commercial real estate market next year due to uncertainty surrounding trade negotiations, weakness in manufacturing and the approach of the presidential election season.
“Next year will bring deceleration on a few fronts, but this still is an expanding economy and a flourishing property market benefiting from a robust job market, solid consumer confidence and low-interest rates,” said Richard Barkham, CBRE’s Global Chief Economist and Head of Americas Research.
“We’ll see resilience across asset classes such as office, retail and multifamily as demand continues to buoy those sectors. And we see transaction volumes and capitalisation rates staying relatively stable.”
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The report also found that alternative investments – a category including self-storage, data centres, medical offices, life sciences facilities, senior housing and student housing – has grown to a 12.5% share of all commercial real estate investment in 2019 from 6% in 2007.
CBRE saw investment volume in this category matching the $59bn annual average of the past six years.
The report also highlighted that with global bond yields expected to remain extremely low and equity markets likely more volatile, the stable returns of U.S. commercial real estate will be even more attractive in 2020.
Investment volume should reach between $478bn and $502bn, on par with the prior two years and making it one of the strongest years on record.
Greater investor caution and buyer-seller disconnects on pricing could slightly reduce volume from 2019 levels.
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