Americas Data Center H2 2024 Update

SILICON VALLEY AMERICAS PRIMARY MARKET

SAN FRANCISCO

OAKLAND

KEY INDICATORS*

956MW In Operation

36.5MW 2024 Colo Leasing

FREMONT / NEWARK

39MW Under Construction

5.8% Colo Vacancy

SANTA CLARA

SAN JOSE

*Definition: Key indicators are based on operational Hyperscale Cloud, Colo, Edge & Telco data centre facilities in the market and excludes Captive & ICT.

Colo

Hyperscale Self-build

MARKET OVERVIEW Silicon Valley, and the broader Bay Area continue to see modest demand for data centers and consistent growth. Power constraints, expensive land and, to a lesser extent, seismic activity risks have kept the under-construction pipeline on a downward trend, with data center completions outpacing projects that have secured power and begun construction. As a result, the planned pipeline has grown to more than 1GW, while 39MW of colocation currently remains under construction. Demand for space in this market still exists, but instead of being able to meet that demand, it has once again radiated outward to nearby markets like Reno, Portland and Eastern Oregon, and Phoenix. However, this hasn’t stopped data center providers from requesting power from Pacific Gas & Electric (PG&E). In PG&E’s 2024 investor update, the company reported 3.5GW of new power requests from data center providers, with delivery dates extending through 2029. Some of these requests are substantial, including one customer seeking 600MW and 800MW. In response, PG&E has reinforced its commitment to the Bay Area’s energy needs by securing a $15 billion loan for infrastructure improvements, increased hydropower generation, expanded transmission capacity, and battery energy storage capacity. Meanwhile, Silicon Valley Power has encouraged new data center proposals to incorporate alternative energy or in-city generation. Will Silicon Valley and the Bay Area see a data center renaissance? It’s possible, but an improved grid and increased power generation won’t alleviate rising land values or provide immediate electricity rate relief. For that reason alone, Washington, Oregon, Nevada and Arizona will continue to offer a significant development and operational cost advantage over Silicon Valley.

ECOSYSTEM DEVELOPMENTS •

PG&E secured a $15 billion loan guarantee from the U.S. Department of Energy’s Loan Programs Office for Project Polaris. This funding will support the expansion of hydropower generation, battery storage and transmission capacity upgrades, helping PG&E meet future energy demands, improve reliability, and reduce costs for its 16 million customers in northern and central California. • Silicon Valley Power is leading efforts to address the increased energy demand from AI adoption by advocating for in-city generation or alternative energy sources in new data center proposals. AWS agreed to use natural gas-powered fuel cells from Bloom Energy at its Santa Clara data center, while Google partnered with Kairos Power to deploy 500MW of small modular reactors (SMRs) by 2035, with the first expected to be operational by 2030. • AWS plans a 15-year, 20MW power purchase agreement with Bloom Energy to support its new Silicon Valley data center, addressing the region's growing energy demands. The deal, expected to cost around $35 million in the first year, highlights AWS's commitment to meeting energy needs despite higher costs and environmental challenges. • GI Partners secured planning permission to build a 72MW data center at 2805 Bowers Ave. in Santa Clara, after the city council's unanimous approval. The project involves demolishing existing office buildings and constructing a new four-story data center, expected to be operational by 2029 or 2030.

CUSHMAN & WAKEFIELD | AMERICAS DATA CENTER MARKET OVERVIEW