The Headline Numbers Are Misleading
When CBRE or JLL publishes national colocation vacancy rates, the number typically lands somewhere between 3–5%. That figure gets cited in board presentations, investor decks, and procurement conversations as evidence of a “tight market.”
It’s not wrong. It’s just not useful.
What the Averages Hide
National vacancy rates aggregate fundamentally different markets into a single number. When you break it down:
- Northern Virginia (the largest market by far) is effectively at zero functional vacancy for enterprise-grade space
- Phoenix and Dallas have seen massive new construction but much of it is pre-leased to hyperscalers before completion
- Chicago, Atlanta, and Denver show healthier vacancy in the 8–12% range — but availability varies dramatically by power density and connectivity
- Emerging markets like Salt Lake City, Columbus, and Reno have pockets of significant availability that don’t show up in top-line reports
Why This Matters for Enterprise Buyers
If you’re an enterprise looking for 500kW to 5MW of colocation capacity, the national vacancy rate tells you almost nothing about your actual options. What matters is:
- Market-specific availability at your required power density
- Connectivity to your cloud providers and network partners
- Pricing trends in your target geography — which can vary 40–60% between markets
- Operator quality — not all available space is created equal
The AI Variable
AI and machine learning workloads are reshaping the vacancy picture in real time. High-density requirements (30kW+ per rack) are consuming available power capacity at rates that traditional vacancy metrics don’t capture.
A facility might show “available space” in square footage terms while having zero available power capacity for modern workloads. This disconnect is creating confusion in the market and leading enterprises to make suboptimal decisions.
Reading the Market Correctly
Smart capacity planning requires looking beyond headline numbers:
- Track power availability, not just floor space
- Monitor construction pipelines — new supply takes 18–36 months to deliver
- Understand pre-leasing rates — much “new supply” is spoken for before it opens
- Evaluate secondary markets where competition for capacity is less intense and pricing is more favorable
What We Recommend
Enterprises planning colocation deployments should:
- Start the sourcing process 12–18 months before needed occupancy
- Evaluate at least 3 markets, not just the obvious Tier-1 options
- Negotiate multi-year pricing with built-in density escalation clauses
- Consider hybrid approaches that combine primary and secondary market deployments
The enterprises that win on colocation strategy are the ones that look where everyone else isn’t — and move before the market catches up.