Lease-Up

Lease-up is the period after a data center phase is delivered during which its capacity is being sold until it reaches stabilized occupancy. Lease-up matters because it sets when a new building starts producing full rental income: capacity that is preleased before delivery shortens the period, while speculative capacity can take several quarters or longer to fill, depending on the market. Investors and lenders track the pace of lease-up through net absorption and vacancy rates, and developers often deliver large campuses in phases so that each phase can be leased up before the next is built. During lease-up the operator carries the full cost of power infrastructure, staff and financing against partial revenue, which is why yield-on-cost is usually quoted at stabilization rather than at opening. Hyperscale tenants can take entire halls at once, which makes lease-up lumpy, whereas retail colocation fills in small increments over time.