Data center demand in North America hit 25 gigawatts of absorption in the first half of this year, double the level from a year prior and five times that of early 2024, according to a JLL report published last month. The surge is reshaping where new projects get built, as developers push beyond traditional hubs into frontier markets that now account for 77% of the industry's construction pipeline.
More than 66 gigawatts of data center capacity is under construction across North America, enough to more than double existing inventory. JLL calls the pipeline "extraordinary," noting it represents more electricity demand than all of Germany. A separate CBRE report focused on the eight largest primary markets found construction climbed 24.8% in the first six months of the year to a record high, with the pipeline now roughly 12 times larger than it was in 2021.
"We're witnessing demand levels that continue to exceed even industry insiders' expectations," said Andy Cvengros, co-lead of JLL's U.S. data center markets team.
Vacancy hits record lows as tenants prelease capacity
New inventory is being absorbed as fast as it can be built. Vacancy across North America sits at just 1%, according to JLL. In primary markets, CBRE reports vacancy falling to a record low of 1.4%, down from 1.6% a year ago. Available space today is largely limited to small, fragmented blocks, not the dozens or hundreds of megawatts that hyperscalers and AI firms need.
More than 80% of under-construction capacity in North American primary markets is already committed, with less than 1.5 gigawatts of future capacity still available. The preleasing activity reflects how tenants are locking down space long before it comes online, driven by the AI infrastructure arms race.
Development shifts to frontier markets
Power shortages and community opposition are constraining growth in traditional data center strongholds like Northern Virginia, Dallas, Silicon Valley, and Chicago. These pressures have accelerated a geographic shift that JLL data shows intensified in the past six months. Frontier markets now hold 77% of the construction pipeline, up from 64% in the second half of last year.
"The geographic transformation of this industry continues its rapid evolution," said JLL Vice President of Data Strategy Sean Farney. "Energy-rich, build-friendly markets like West Texas, Ohio, Louisiana and the Carolinas have seen massive investment in recent years."
Texas has been the primary beneficiary. A previous JLL report projects the state could overtake Virginia as the world's largest data center market by the end of the decade. CBRE's data shows Atlanta overtook Northern Virginia as the top market for data center construction in the first half of this year, as land constraints and difficult permitting slowed growth in the longtime industry mecca.
Where the next boomtowns will emerge
CBRE First Vice President Holly Lahd said on a webinar that the Midwest and Mountain West are likely to see the next wave of data center development. A diverse mix of utilities in those regions has given developers more success securing the large blocks of power required for hyperscale projects.
"The reason for this is that there's a variety of different utilities in the market … and you see different business models and different requirements and how eager they are for large loads, particularly in rural areas," Lahd said. "They also have multiple paths to power procurement."
Power availability and the speed of infrastructure delivery remain the primary drivers of site selection, according to CBRE, and those dynamics are expected to persist.
Why this matters for real estate and construction professionals
The data center boom is redrawing development maps and creating opportunities in markets that had little data center presence a decade ago. For construction firms and developers, the shift toward rural and energy-rich areas means new demand for land acquisition, power infrastructure, and skilled labor in regions unaccustomed to hyperscale projects. Firms that build expertise in navigating utility negotiations and local permitting in these emerging markets will be positioned for a pipeline that shows no signs of slowing. Understanding how AI workloads drive site selection is becoming essential - for professionals looking to build that knowledge, AI for Real Estate & Construction courses offer practical grounding in the technology reshaping the sector.
Your membership also unlocks:
