The North America data centre colocation market is at a critical juncture, with vacancy rates diving to a record low of 2.3% as demand for digital infrastructure soars. This trend, outlined in JLL’s North America Data Center Report – Midyear 2025, highlights an explosive growth trajectory marked by severe capacity constraints and challenges in energy sourcing. As inventory balloons to a staggering 15.5 GW, the sector faces mounting pressures.
Maintaining the crown as North America’s largest data centre hub with 5.6 GW of capacity, Northern Virginia dwarfs Dallas-Fort Worth, the second-largest market, which stands at just 1.5 GW. The dominance of cloud providers and tech companies remains evident, accounting for 65% of all leasing activity.
“The colocation market is experiencing unprecedented demand pressure under an increasingly stressful environment,” said Andy Cvengros, Executive Managing Director, Co-Lead of U.S. Data Center Markets, JLL. “The first half of the year was riddled with disruptions, including the DeepSeek news at the beginning of the year and the potential impact of tariffs on demand and construction. Despite the turbulence, the sector posted another record-shattering performance.”
The market absorbed a remarkable 2.2 GW in the first half of 2025, with significant activity in Northern Virginia (647 MW) and Dallas-Fort Worth (575 MW). Chicago and Austin also demonstrated substantial leasing, positioning the sector to surpass 2024’s record absorption levels.
The construction pipeline has expanded to 7.8 GW, a tenfold increase from five years prior. Notably, 73% of all capacity under construction is preleased, highlighting ongoing pressures and indicating that true market relief may be years away. Phoenix leads development activity outside Northern Virginia, followed closely by Chicago and Atlanta.
“What we’re seeing now is ‘commit-brefore-it’s-built-or-you-won’t-get-in’,” remarks Matt Landek, Division President, JLL. This changes data centre strategies as enterprise user who once planned 6 to 12 months in advance are now securing capacity 18 to 24 months before deployment date.
The power constraints in established markets are propelling growth in emerging hubs. Columbus and Austin/San Antonio have seen colossal growth of 1,800% and 500%, respectively, since 2020. Commercial electricity rates surged by nearly 30% since 2020, urging markets with lower energy costs, like Salt Lake City and Denver, to gain traction.
Andrew Batson, Head of U.S. Data Center Research at JLL, describes power availability as the “new real estate,” with delays in grid connections exacerbating the strained landscape. Yet, this limitation is preventing potential market saturation, even as the colocation market is poised for a 20% compound annual growth rate through 2030.
The data centre sector has solidified its status as a prime real estate asset, boasting a market cap increase of 161% since 2019. Fuelled by insatiable demand, limited supply, and rising rents, investment in data centre projects shows no sign of abating.
The debt markets have also expanded, with marked increases in asset-backed securities (ABS) deals and single-asset single-borrower loan activities (SASB) for the 3rd year running. H1 2025 had 14 ABS deals worth $7.7 billion and 4 SASB deals worth $5.7 billion. Despite these expansions, asset-level investment sales remain tempered ($754 million in 23 transaction), maintaining steady average cap rates of 6%.
Despite an additional planned capacity of 31.6 GW, supply is phased over the next five years with JLL anticipating the supply-demand imbalance to persist. Northern Virginia remains a leader in future plans (5.9GW), with substantial projects also expected in Phoenix (4.2GW), Dallas-Fort Worth (3.9GW), and Las Vegas/Reno (3.5GW).
“North America could see $1 trillion of data centre development between 2025 and 2030,” Batson added. “Based on our forecast, more than 100 GW of colocation and hyperscale capacity could break ground or deliver over the next five years. These projections do not include the potential upside of quantum computing, which we see as a sector accelerant over the next 5 to 10 years.”
As enterprises adopt AI strategies and push digital transformation, the data centre industry braces for unprecedented demand and emphasises the need for robust forward planning to address the looming supply crunch.
