North American Data Center Market Surges Amid AI Boom
A new report from CBRE reveals the North American data center market is experiencing unprecedented growth, fueled by soaring demand from artificial intelligence development, cloud computing and e-commerce. The market set records across nearly every major indicator in 2025.
Record Absorption and Low Vacancy Rates
Across eight primary data center markets, users absorbed 2,497.6 megawatts (MW) of space in 2025, a 38% increase from 2024 . Despite a 36% increase in total capacity, the vacancy rate plummeted to a historic low of 1.4%, demonstrating the rapid pace at which new space is being occupied .
A Unique Market Anomaly
Gordon Dolven, CBRE’s data center research director, noted that the data center market is an anomaly compared to other commercial real estate classes . Rental prices, which had been declining for years, experienced a dramatic turnaround starting in 2021. Since then, the average asking rental rate per kilowatt per month has risen from approximately $120 to $195 .
The Impact of AI and Hyperscalers
While the AI “arms race” is a significant driver, Dolven emphasized that data centers support all facets of modern digital life . Hyperscalers – large technology companies like Google – are responsible for the majority of the demand.
Construction Slowdown and Challenges
Despite the high demand, construction activity slowed for the first time since 2020 . CBRE attributes this to hurdles in permitting, zoning, and power procurement .
Power Constraints and Location Shifts
Power availability is the primary constraint on the data center market’s ability to meet demand. Developers now require their own onsite substations due to the increased power needs, extending construction timelines . Advancements in fiber connectivity are also allowing for more location flexibility, with markets like Nevada, Pennsylvania, and Michigan becoming increasingly attractive due to abundant land, more flexible permitting, and easier access to power.
Regional Leaders and Emerging Markets
Northern Virginia has reclaimed its position as the national leader in data center capacity, exceeding three and a half times the combined capacity of all secondary U.S. Markets . Other primary markets include Dallas-Fort Worth, Silicon Valley, Chicago, Phoenix, the New York metropolitan region, Atlanta, and a community outside Portland. Central Washington, Toronto, and Montreal are also among the largest North American data center markets.
Primary markets also include: Northern Virginia; Atlanta, Georgia; Dallas-Fort Worth, Texas; Chicago, Illinois; Phoenix, Arizona; Silicon Valley, California; Hillsboro, Oregon; and the New York Tri-State area .