Building data center modules “off-site” and adding space in large chunks has driven the cost of wholesale speculative data center construction down by 15-20% in 2011, according to Grubb & Ellis, a commercial real estate advisory firm.

While cost to build dropped, wholesale pricing on a national level remained flat, Grubb & Ellis said in its 2011 year-end report. The company attributed this to increased competition in the space.

“Downward pressure on pricing is more likely operator-specific than market-specific,” the report read.

Lower development costs and flat pricing where two of five major trends Grubb & Ellis identified in the commercial data center space over the course of 2011.

One of the other trends was increased willingness by companies to spend their own capital to build out data center capacity instead of leasing wholesale space. The advisors said this was due to passage of a federal bill known as the Reid-McConnell Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The bill extended a series of tax breaks that were set to expire at the end of 2010.

Because there are more data center developers and operators in the market, the number of business models has expanded. Tenants now have more opportunities to build to the power densities they need. “Overly dense” models, which Grubb & Ellis defines as 200 watts per 1 sq ft, take longer to sell in certain markets, such as Chicago or New York.

Finally, the real estate advisors noticed a major uptick in leases of capacities from 400kW to 600kW. “This has further blurred the lines between wholesale and colocation,” they wrote.

Strongest leasing activity in 2011 took place in Santa Clara and suburban Chicago area. Santa Clara saw major deals like a 9MW lease by Zynga, a 6MW lease by Telx and a 4.5MW lease by CenturyLink-owned Savvis, among others.

Major leases in the Chicago metro region included a 7.9MW lease by Rackspace, a 3MW lease by Server Central and a 2.6MW lease by Salesforce.com in Elk Grove Village.