Data center demand outpacing construction capacity, creating industrial real estate surge
Data center vacancy has hit record lows of 2 percent as AI adoption accelerates, creating a mismatch between demand and available capacity, according to Newmark's 2026 Data Center Market Outlook report.
The report projects that if AI usage reaches adoption levels similar to the internet or smartphones, an additional 250GW of capacity would be needed. Current planned AI data center projects fall far short of this figure.
The constraint isn't just computing power-it's electricity. The market faces a catch-22: mass AI adoption requires new data center capacity, but new capacity requires power infrastructure that doesn't yet exist.
Capital spending accelerates despite uncertainty
Hyperscalers, developers, and their partners are treating data center buildout as an "existential investment," pouring capital into projects at an accelerating pace. Hyperscalers alone are expected to spend $700 billion in 2026 to meet data center commitments.
Last year, data center investment topped $580 billion, surpassing investment in new oil supply for the first time. Some estimates suggest $3 trillion in total investment may be required over the next five years.
This spending assumes the "aggressive but still plausible scenario" in the Newmark report doesn't account for increases in enterprise workloads, edge computing, or AI training-which is forecast to grow 3x annually through 2030.
Texas industrial real estate sees dramatic demand shift
Data center construction is driving demand for supporting industrial infrastructure. Spending on data center construction has risen nearly 400 percent since 2020, boosting need for warehouses, outdoor storage, and manufacturing facilities.
Texas exemplifies this trend. The state's 337 existing data centers generate an average of 531,000 square feet of supporting industrial occupancy per facility. Data center-related industrial leasing in Texas reached nearly 14 million square feet in 2025-more than double the figure from five years ago.
Current projects in the Texas pipeline could generate 24 million additional square feet of industrial space needs. Proposed projects would add another 14 million square feet.
Dallas-Fort Worth accounts for nearly half of upcoming data center projects in Texas. The state currently hosts 6.5GW of the 35GW in data center capacity under construction across the U.S.
Some projections suggest Texas could become the world's largest data center market by 2030, overtaking Virginia as the primary U.S. hub.
For real estate and construction professionals, this shift creates both opportunity and logistical challenges. The speed of demand is outpacing traditional development timelines, and securing power and water infrastructure remains the primary constraint on expansion.
Related: AI for Real Estate & Construction
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