Data Center Investment in San Francisco
San Francisco's data center market sits at the epicenter of global AI demand, but power constraints are choking supply. Cap rates hover between 4.5%-6.8% depending on tenant mix and power availability. The city's position as headquarters for OpenAI, Salesforce, and hundreds of AI startups creates insatiable demand for low-latency capacity. Problem is, PG&E can't keep up. New construction basically stopped after 2024 unless you've got existing power contracts. Existing facilities with available MW are trading at premiums. Colocation operators are expanding to edge markets like Oakland and San Jose, but enterprise clients still want SF proximity. If you're marketing a data center here, lead with power story and fiber connectivity. Everything else is secondary.
Market Context
Cap Rate Range
4.5%-6.8% depending on tenant quality and power availability
Current Vacancy
2.1% for powered space, 8.4% for shell capacity awaiting utility upgrades
Rent Trend
Up 18% YoY for colocation, 24% for hyperscale-ready facilities
Absorption
94% of new supply pre-leased before delivery
Price Per Unit Trend
$180-220 per square foot for powered shell, $450-600 per MW of IT capacity
Transaction Volume
Down 31% by unit count but up 47% by dollar volume as average deal size hits $89M
Submarket Analysis
South of Market (SOMA)
4.5%-5.2% capVacancy
1.4%
Avg Rent (1BR)
$28-34 per sq ft NNN for colocation space
Tight supply, major hyperscalers competing for capacity
OM Tip
Emphasize fiber carrier diversity - 15+ on-net providers typical
Mission Bay/China Basin
5.1%-6.0% capVacancy
3.2%
Avg Rent (1BR)
$24-29 per sq ft NNN
Newer construction, better PUE ratings
OM Tip
Highlight cooling efficiency and seismic upgrades
Potrero Hill
5.5%-6.8% capVacancy
4.8%
Avg Rent (1BR)
$22-27 per sq ft NNN
Industrial conversion opportunities, power capacity constraints
OM Tip
Detail utility upgrade timeline and permitting status
Bayview/Hunters Point
6.2%-7.1% capVacancy
7.3%
Avg Rent (1BR)
$19-24 per sq ft NNN
Emerging market, better power availability than core SF
OM Tip
Address fiber connectivity gaps and expansion plans
Performance by Vintage
0
P
1
r
2
e
3
-
4
2
5
0
6
1
7
0
8
9
f
10
a
11
c
12
i
13
l
14
i
15
t
16
i
17
e
18
s
19
20
n
21
e
22
e
23
d
24
25
m
26
a
27
j
28
o
29
r
30
31
c
32
o
33
o
34
l
35
i
36
n
37
g
38
39
a
40
n
41
d
42
43
p
44
o
45
w
46
e
47
r
48
49
d
50
i
51
s
52
t
53
r
54
i
55
b
56
u
57
t
58
i
59
o
60
n
61
62
u
63
p
64
g
65
r
66
a
67
d
68
e
69
s
70
71
b
72
u
73
t
74
75
o
76
f
77
f
78
e
79
r
80
81
c
82
o
83
n
84
v
85
e
86
r
87
s
88
i
89
o
90
n
91
92
u
93
p
94
s
95
i
96
d
97
e
98
.
99
100
2
101
0
102
1
103
0
104
-
105
2
106
0
107
1
108
8
109
110
b
111
u
112
i
113
l
114
d
115
s
116
117
h
118
i
119
t
120
t
121
i
122
n
123
g
124
125
s
126
w
127
e
128
e
129
t
130
131
s
132
p
133
o
134
t
135
136
f
137
o
138
r
139
140
e
141
f
142
f
143
i
144
c
145
i
146
e
147
n
148
c
149
y
150
151
a
152
n
153
d
154
155
c
156
a
157
p
158
a
159
c
160
i
161
t
162
y
163
.
164
165
2
166
0
167
1
168
9
169
-
170
2
171
0
172
2
173
4
174
175
c
176
o
177
n
178
s
179
t
180
r
181
u
182
c
183
t
184
i
185
o
186
n
187
188
d
189
e
190
s
191
i
192
g
193
n
194
e
195
d
196
197
f
198
o
199
r
200
201
A
202
I
203
204
w
205
o
206
r
207
k
208
l
209
o
210
a
211
d
212
s
213
214
w
215
i
216
t
217
h
218
219
2
220
N
221
+
222
1
223
224
r
225
e
226
d
227
u
228
n
229
d
230
a
231
n
232
c
233
y
234
235
s
236
t
237
a
238
n
239
d
240
a
241
r
242
d
243
.
244
245
P
246
o
247
s
248
t
249
-
250
2
251
0
252
2
253
4
254
255
d
256
e
257
v
258
e
259
l
260
o
261
p
262
m
263
e
264
n
265
t
266
267
s
268
t
269
a
270
l
271
l
272
e
273
d
274
275
o
276
n
277
278
p
279
o
280
w
281
e
282
r
283
284
a
285
v
286
a
287
i
288
l
289
a
290
b
291
i
292
l
293
i
294
t
295
y
296
297
-
298
299
o
300
n
301
l
302
y
303
304
t
305
w
306
o
307
308
p
309
r
310
o
311
j
312
e
313
c
314
t
315
s
316
317
b
318
r
319
o
320
k
321
e
322
323
g
324
r
325
o
326
u
327
n
328
d
329
330
s
331
i
332
n
333
c
334
e
335
336
e
337
a
338
r
339
l
340
y
341
342
2
343
0
344
2
345
5
346
.
What Your OM Needs to Address
Power Infrastructure Detail
Document total MW capacity, available capacity, utility feeds, backup generation
Data to Include
PG&E contract terms, generator fuel type and runtime, UPS battery backup duration, power distribution unit specs
Cooling System Analysis
PUE ratings, cooling redundancy levels, efficiency metrics by season
Data to Include
Current PUE, design PUE, chiller plant capacity, outside air economizer hours, water usage effectiveness
Tenant Concentration Risk
Revenue diversification across hyperscale, enterprise, and colocation segments
Data to Include
Top 5 tenant lease terms, revenue concentration percentages, expansion rights, early termination clauses
Connectivity Infrastructure
On-net carrier count, fiber route diversity, internet exchange access
Data to Include
Carrier list, meet-me room capacity, cross-connect fees, peering relationships, latency to major exchanges
Operating Expense Trends
Utility rate escalations, maintenance reserves, technology refresh cycles
Data to Include
Three-year utility cost history, deferred maintenance schedule, equipment replacement timeline, insurance cost trends
Expansion Capacity
Available land, zoning for additional density, utility capacity for growth
Data to Include
Developable square footage, height restrictions, parking requirements, utility capacity reservations, permitting timeline
Investment Outlook
Short Term
Supply constraints drive rent growth through 2026. AI companies paying premiums for immediate capacity. Expect continued cap rate compression for stabilized assets with quality tenant rosters.
Medium Term
Edge expansion accelerates as core SF hits physical limits. Oakland and San Jose see institutional investment as hyperscalers accept 5-10ms additional latency for lower costs and better power availability.
Long Term
Quantum computing and next-gen AI workloads could obsolete current cooling and power infrastructure by 2030-2032. Factor technology transition risk into hold periods beyond 7 years.
Buyer Profile
REITs and institutional funds chasing yield in low-rate environment. Hyperscalers acquiring strategic assets. Private equity targeting value-add conversions in secondary submarkets.
Marketing a data center property in San Francisco?
DealDraft generates professional offering memorandums with market-specific data and property-type expertise built in.
Create Your OM