The amount of data center construction underway in North America's top markets has skyrocketed by approximately 70% over the past year, reaching a record 3.9 gigawatts, according to a report from CBRE Group released on Tuesday. This surge underscores the growing demand for data centers, which serve as critical infrastructure for the world's leading technology companies.
As these companies expand their artificial intelligence (AI) and cloud computing operations, the power requirements of data centers have soared, driving significant growth in the sector. In the first half of 2024 alone, over 500 megawatts of new data center capacity were brought online across the eight largest markets in the United States and Canada—a figure equivalent to the entire existing capacity of Silicon Valley.
According to CBRE, the inventory of new data centers increased by 10% in the first six months of the year and saw a 23% jump compared to the previous year. The eight major data center markets include Northern Virginia, Dallas-Fort Worth, Silicon Valley, Chicago, Phoenix, the New York Tri-State Area, Atlanta, and Hillsboro, Oregon.
While new inventory surged, vacancy rates for data centers plummeted to a historic low of 2.8%, reflecting the intense demand for these facilities. Prices for newer data centers have risen, with a noticeable premium over older facilities. This price disparity is attributed to the older centers' inability to meet the power demands of modern computing needs.
"The demand for high-powered computing has exacerbated the pricing disparity between legacy facilities and new data centers, partially because older data centers don’t have the infrastructure to handle the power demands of today’s users," stated CBRE's Data Center Trend Report.
As a result of this heightened demand, smaller markets such as Northern Indiana, Idaho, Arkansas, and Kansas are becoming increasingly attractive for new data center developments, offering potential growth opportunities beyond the traditional hubs.
