DENVER—The construction pipeline for data centers increased by more than 70% year over year to 184.4 megawatts, according to CBRE's second-quarter report on the sector. That's on top of 99.9 MW of capacity that was delivered in the first half of the year.  

“Significant demand for data center space continued throughout primary wholesale colocation markets in the first half of 2015,” according to the report from a CBRE data center team led by managing director Pat Lynch. “Deliveries of new construction have been able to keep pace with large amounts of demand absorbing 94.8 MW of critical power in the first two quarters alone—a rate that is on track to match 2014 absorption levels.”

In the face of increasing demand, the primary markets are reporting lower vacancy rates despite the substantial influx of new data center spaces. As vacancy rates shrink across all markets, some data center owners are raising lease rates while others are holding the line on current rates.

Demand is coming from the financial services, technology, social media and healthcare sectors are driving demand, and CBRE says this trend is expected to continue for the foreseeable future. The prevalence of non-redundant requirements is growing among the technology and social media sectors with users from other industries seeking similar redundancies for high performance computing solutions, according to CBRE.

CBRE says data center transactions are becoming larger in terms of power and space, which leads increased pre-leasing activity as users demand contiguous space for their data center footprint. Pre-leasing tends to be more successful among established providers that are financially sound and can deliver a proven quality product, the report states.

“A flight to quality is also being seen throughout the industry as end users are vacating antiquated facilities and occupying newly conditioned data center space,” according to CBRE. “Existing data center space in offices is also being moved to colocation facilities in response to rising office rents and need for higher quality space to house their technology.”

The report also notes an increasing emphasis on cloud computing, with cloud center data traffic expected to grow 32% annually through 2018. “Providers are responding to the need for this offering with acquisitions of cloud companies and developing their own cloud services,” the report states.