What Microsoft’s Canceled Data Center Leases Means for the Industrial Market

Data storage has been the standout asset class for the commercial real estate world ever since ChatGPT burst into our lives, reaching an unprecedented 100 million users in only two months. The data center market has been so hot that CBRE has started its own Data Center Solutions advisory group and acquired Direct Line Global, an infrastructure provider for data centers last year. But, despite what many thought was going to be years worth of double-digit growth in demand for data centers, Microsoft has started to slow down and even shrink some of its data center footprint.

The report comes from TD Cowen, a securities analyst group, which found that Microsoft has canceled leases for North American data centers totaling the equivalent of two full facilities. Microsoft has also allowed several letters of intent (LOIs) for other centers to lapse and has walked away from at least five properties it had under contract...