North America Data Center Report Midyear 2025

Colocation vacancy is nearing 0%, which is constraining economic growth and undermining national security. Data centers are critical infrastructure and restrictive market conditions are counterproductive over the long-term.

The construction pipeline of 8 GW is 73% preleased, signaling that any meaningful loosening of market conditions remains a few years away at minimum. Even if preleasing activity slows significantly in the near-term, vacancy would likely remain below 5% through 2027. A more likely scenario is that vacancy holds in the 2% range through 2027.

Companies looking to expand their data center operations may be limited to preleasing in new developments. This could be followed by a year or more of waiting for construction to be completed before taking occupancy.

With vacancy near 0%, virtually all absorption is the result of preleasing. A market’s ability to capture new requirements relies heavily on the development pipeline in that region and the amount of capacity that remains available for lease. 

Some data center development has been moving into secondary and tertiary markets in search of power, lower costs and speed to market. This is particularly true for hyperscale projects. However, emerging markets are only capturing a fraction of colocation demand. JLL’s market data continues to demonstrate that colocation demand is concentrated in core markets.

In the first half of 2025, 50% of absorption was recorded in two markets: Northern Virginia (647 MW) and Dallas (575 MW). Rounding out the top 5 markets for absorption in H1 were Chicago (368 MW), Austin/San Antonio (291 MW) and Atlanta (150 MW).

The data center sector remains among the most favored real estate asset classes due to insatiable tenant demand, limited supply and rising rents.

Preleasing demand continues to bode well for all phases of data center financing including construction loans, transitional loans, and stabilized loans. The lender pool depth continues to expand, inclusive of commercial real estate banks, project finance lenders, life companies, and debt funds. 

Horizontal development financing needs have been in higher demand as utility companies are requiring hard deposits earlier in the power procurement process. There are also increased capital needs by development groups utilizing behind-the-meter solutions or bridging alternatives.