JLL’s recent midyear report on the data center market highlights the persistent issue of power delays, which remain a major obstacle for the industry. Despite this constraint, the commercial real estate firm notes that it is helping to prevent a speculative bubble.
The report reveals a sharp decline in vacancy rates, now standing at just 2.3%. With 73% of new construction already pre-leased, market relief is still several years away.
Bridging the Capacity Gap
Facing the sector’s record-low vacancy rate, data center operators have limited short-term options. However, strategies such as behind-the-meter power solutions can help bridge the gap until new capacity becomes available, according to Andrew Batson, head of data center research for the Americas at JLL.
Batson suggests that natural gas turbines can provide a quicker path to power, with the potential to be operational within months rather than years. Additionally, powered-land sites across the U.S. that are ready for development could help expedite project timelines.
Cloud providers can offer near-term capacity to tenants, albeit at a higher cost compared to colocation services. Some enterprises may also explore self-built or on-premises data center facilities as alternative solutions, as noted by Batson.
Existing data centers may contain untapped opportunities, with facilities possessing stranded power that could be retrofitted relatively quickly, providing operators and tenants with interim solutions to address the current supply shortage.
Regarding future energy trends, Batson mentions the potential of fuel cells and small modular reactors powered by nuclear energy, which could play significant roles in the data center industry by 2030.
North America Market Snapshot
In the first half of 2025, North America’s data center sector utilized 2.2 GW of power capacity, with a strong demand concentrated in core regions like Northern Virginia (NoVA), which remains significantly larger than Dallas-Fort Worth.
The ongoing construction activity in the sector is substantial, with a record 7.8 GW currently under development, marking a tenfold increase compared to five years ago. An additional 31.6 GW is in the planning stages.
Commercial electricity costs have risen by 30% since 2020, prompting 75% of new development to gravitate towards low-cost power markets.
Appetite for More Data Centers
The expanding data center debt markets are indicative of robust investor interest, with asset-backed security (ABS) and single-asset single-borrower (SASB) loan activities reaching $13.4 billion in the first half of 2025. Despite this, direct investment sales remained subdued at $754 million, with cap rates hovering around 6%.
Projections from the report suggest a potential $1 trillion investment in data center development between 2025 and 2030, bolstered by the high demand from investors.
Hyperscalers are increasingly venturing into emerging markets, particularly for AI training purposes, which could pave the way for colocation facilities to follow suit. Core markets are expanding geographically, with Northern Virginia stretching as far south as Richmond, and similar growth patterns observed in other key regions.
