The North American data center market has “entered hyperdrive,” and the convergence of artificial intelligence (AI) demand, hyperscaler expansion, and grid constraints is fundamentally reshaping where digital infrastructure gets built.
That’s according to JLL’s new North America Data Center Report – Year-End 2025. The North America data center industry has reached an inflection point, with vacancy locked at a record-low 1% for the second consecutive year as the sector’s extraordinary expansion fundamentally redraws the industry landscape.
The report reveals how 64% of the 35 GW construction pipeline now extends beyond traditional mature markets and, as a result, Texas is positioned to overtake Virginia as the world’s largest data center market by 2030. JLL now tracks 39 GW of active capacity across North America, roughly half of which is leased and the other half owned by hyperscalers.
“The data center sector has officially entered hyperdrive,” said Andy Cvengros, executive managing director and co-lead of U.S. data center markets at JLL. “Record-low vacancy sustained over two consecutive years provides compelling evidence against bubble concerns, especially when nearly all our massive construction pipeline is already pre-committed by investment-grade tenants. This structural change is driven by hyperscale and AI demand and development headwinds that will likely keep vacancy near zero for the next several years.”
Available capacity remains limited to small, fragmented blocks, offering little flexibility for large-scale deployments. Most tenants securing space today are contracting for deliveries in 2027 or 2028, underscoring the depth and durability of forward demand.
Texas Leads Frontier Market Surge as Geographic Boundaries Dissolve
More than half of the extraordinary construction volume is in frontier markets, which JLL defines as the markets outside traditional mature hubs like Northern Virginia, Dallas-Fort Worth, and Silicon Valley. Texas alone accounts for 6.5 GW of capacity under construction, supporting projections that the state could overtake Virginia as the largest global data center market by 2030.
Other beneficiaries of this geographic transformation include Tennessee, Wisconsin, and Ohio, which, like Texas, are capitalizing on abundant energy resources, ample land availability, and business-friendly operating environments. Project scale has expanded sharply, with JLL tracking more than 10 projects of 1 GW or larger currently under construction, a threshold that would have been eye-opening just a few years ago.
Hyperscalers Drive $710 Billion CapEx Surge Amid Energy Innovation
Hyperscalers continue to set the pace for the industry, with the top five announcing $710 billion of planned 2026 CapEx, sufficient to support 35 GW of new or refreshed capacity globally. These commitments set both the direction and pace for the industry, but hyperscalers are not the only act in town. Pure-play AI companies were linked to roughly 10 GW of project announcements in 2025, with OpenAI and Anthropic leading the charge, while neocloud providers leased approximately 1 GW.
However, this unprecedented demand is colliding with significant infrastructure constraints. Grid connection timelines averaging four years or longer are fundamentally changing how hyperscalers and other major tenants approach data center development and deployment, forcing them to secure capacity years in advance and driving the expansion into frontier markets with more available power resources.
“Developers that collaborate with utilities on innovative solutions, such as flexible load profiles, phased power requirements, or backup generation, can often expedite their grid connections,” said Matt Landek, global division president of data centers and critical environments at JLL. “The industry is rapidly adopting interim power strategies as companies work to close the gap between immediate capacity needs and grid infrastructure timelines. Major hyperscalers and leading operators have achieved carbon-neutral data center operations through comprehensive renewable energy procurement, demonstrating how sustainability mandates increasingly drive location decisions, facility design, and operational strategies.”
Pricing Momentum Accelerates as Supply Scarcity Drives Rent Growth
Supply scarcity continues to drive robust rent growth, with data center rents increasing 9% in 2025, which is in line with the five-year CAGR of 10% and reinforces the durability of pricing momentum. Rent growth was broad-based across all deal sizes, with listings greater than 1 MW commanding premium increases of 13%.
“With record-low vacancy across North America, we are conservatively forecasting rent growth at a 7% CAGR through 2030,” said Andrew Batson, JLL’s global head of data center research. “With rents up 60% since 2020, landlords are capturing significant rent spreads on renewals while tenants continue to experience pronounced sticker shock on new leases. Most leases being executed today include annual escalations of 3% or more, with little to no concessions.”
The full report is available here.
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