What is a typical characteristic of the rental metrics in data centers?

In the context of data centers, a typical characteristic of rental metrics is that the rent per megawatt (MW) can vary with occupancy. This variability is reflective of the demand and supply dynamics inherent in the data center market.

As occupancy rates change, so too does the pricing structure. When demand for data center space is high and occupancy increases, landlords may increase the rent per MW to capitalize on the demand. Conversely, during periods of lower occupancy, prices might decrease or offer incentives to attract tenants. This relationship emphasizes the flexibility and responsiveness of rental agreements in data centers to market conditions and utilization rates, making it a key characteristic of this sector.

Stable annual rent increases and standardized pricing do not generally capture the complexity and variability of the data center market, where economic factors and tenant needs can significantly impact rental rates. Similarly, while some contracts may have variable lengths, they are often tailored to specific client needs and market conditions, making variability in occupancy a more defining characteristic.