Data center demand exceeds expectations as H1 2026 absorption hits record 25 GW

• Record 25 GW absorption driven by AI infrastructure race: North America data center demand doubled year-over-year in H1 2026 as hyperscalers, neoclouds and AI companies compete for scarce capacity amid sustained 1% vacancy.
• $700 billion debt wave signals investor confidence: Permanent financing expected through 2028, with AI-related bond issuance hitting $250 billion in H1 2026 alone across investment-grade and high-yield markets.
• Responsible growth depends on community engagement: Frontier markets now account for 77% of construction pipeline as the industry must prioritize transparency around local impacts while delivering tax revenue and infrastructure investment.

CHICAGO, August 11, 2026 – North America data center demand reached an all-time high in the first half of 2026 with 25 GW of absorption, double the level from a year ago and five times that of two years prior. JLL’s North America Data Center Report – Midyear 2026 reveals that while structural demand continues to accelerate, responsible growth now depends on building trust through transparency and early community engagement around electricity, water and noise impacts.

The report exposes a stark paradox: While 79% of Americans support U.S. leadership in artificial intelligence, only 14% support data center development in their community, which is a 65-point support gap that threatens to constrain the infrastructure buildout required to maintain AI competitiveness.

“We’re witnessing demand levels that continue to exceed even industry insiders’ expectations,” said Andy Cvengros, Executive Managing Director, Co-Lead of U.S. Data Center Markets, JLL. “The market absorbed 25 gigawatts in just six months, driven by hyperscalers, neoclouds and pure-play AI companies competing aggressively for scarce capacity. But the real story is how community acceptance, or lack thereof, has emerged as the defining challenge for this next phase of growth. The industry and communities need to come together to find a path forward that benefits everyone.”

With vacancy sustained at 1% for the third consecutive year despite unprecedented construction activity, North America now has 66 GW under construction, 95% of which is pre-committed. Texas has cemented its position as the state for data centers, with 26 GW of existing and under-construction capacity, followed by Virginia at 13 GW, while frontier markets now account for 77% of all capacity under development.

“The geographic transformation of this industry continues its rapid evolution,” said Sean Farney, Vice President, Data Center Strategy, JLL. “Energy-rich, build-friendly markets like West Texas, Ohio, Louisiana and the Carolinas have seen massive investment in recent years. As development accelerates to meet growing demand for advanced technologies, developers are also taking a more transparent approach — working with communities to address local impacts while delivering jobs, tax revenue, infrastructure investment and long-term economic growth.”

Capital markets reach record scale as permanent debt demand surges

Data center financing liquidity remains robust across all credit tiers, with capital markets activity reaching unprecedented levels. Construction activity is expected to drive more than $700 billion in permanent debt originations over the next 30 months, reflecting investor confidence in the sector’s long-term fundamentals.

Investment-grade hyperscaler construction loans continue to command the most efficient pricing, while non-credit tenant deals are evaluated ad hoc with spreads approximately 200-300 basis points wider. Commercial mortgage-backed securities and asset-backed security data center volume combined for $17 billion in the first half of 2026, a 29% increase from the previous year.

“The capital markets have adapted remarkably well to support this unprecedented buildout,” said Carl Beardsley, Senior Managing Director and Head of Data Center Capital Markets at JLL. “We’re seeing strong liquidity across the entire credit spectrum, from investment-grade hyperscalers to non-credit deals. The AI-driven construction cycle is fueling sustained debt demand, with high-yield bond issuance reaching $32 billion in the first half alone. Capital providers recognize the structural nature of this demand and are pricing accordingly.”

The first half of 2026 also saw AI-related bond issuance surge, with investment-grade issuers generating $218 billion, illustrating how capital markets are broadening to support AI infrastructure development at unprecedented scale.

Rent growth sustains momentum as capacity constraints persist through 2030

Data center rental rates have increased nearly 70% since 2020, with rent growth averaging 9% annually and positioning landlords to capture significant spreads at lease expiration. Current pricing momentum remains in line with historical trends and is expected to hold through 2030, supported by vacancy near 1% and 95% of the development pipeline already pre-committed.

Market fundamentals remain exceptionally strong across nearly every major data center hub. Dallas-Fort Worth delivered over 2 GW while absorbing even more. Columbus compressed to 0.1% vacancy despite bringing significant new supply online. Atlanta hit record absorption of 918 MW in just six months.

“These aren’t isolated success stories anymore," said Curt Holcomb, Vice Chair, Global Data Center Solutions, JLL. “We’ve seen a structural shift where sustained low vacancy, landlord leverage and forward pre-leasing have become the new normal. Tenants securing space today are contracting for 2028 deliveries, which underscores just how deep and durable forward demand really is.”

Market activity in the first half showcased several standout performers beyond those mentioned. Austin/San Antonio completed 1.7 GW and absorbed 796 MW as development extended beyond the urban core along the I-35 corridor. Phoenix absorbed 442 MW amid 1.7 GW under construction and Northern Virginia

maintained its position as the world’s largest single data center market with nearly 7 GW of inventory despite vacancy tightening to less than 1%.

Hyperscaler CapEx and diversifying demand mix drive structural growth

Hyperscalers remain the dominant force, accounting for 59% of 2026 data center tenant demand while meeting capacity needs through both leasing and self-building, with 28 GW of owner-occupied capacity currently under construction. However, the demand mix is diversifying rapidly, with neoclouds maturing into a meaningful component at 11% of demand and pure-play AI companies accounting for 7%.

With capacity scarce and the opportunity cost of waiting high, companies are forming partnerships to secure infrastructure wherever available. AI companies are leasing capacity from hyperscalers, while neoclouds are supplying capacity to hyperscalers, reflecting an exceptionally capacity-constrained market rather than systemic risk.

"Sustained low vacancy would typically fuel runaway pricing, but the primary restraint comes from developers pricing new product competitively to secure tenant commitments years in advance," said Andrew Batson, Global Head of Data Center Market Intelligence, JLL. “What’s remarkable is that even with 66 gigawatts under construction, we’re likely to see vacancy remain near zero through 2028. The structural growth story is supported by rapid AI adoption and limited overall penetration, suggesting this infrastructure build is still in its early innings."

Lost in the headlines are enterprise users managing hybrid portfolios and working to modernize their infrastructure. Individual enterprise requirements typically range from 500 kW to 3 MW, yet even this segment is struggling to secure capacity to support business growth amid competition from hyperscale deployments.

1.)   Question: Why is community acceptance becoming such a critical issue for data center development?

Answer: While 79% of Americans support U.S. leadership in AI, only 14% support data center development in their community, which is a 65-point gap. Responsible growth now depends on building trust through transparency around electricity, water and noise impacts, while demonstrating lasting benefits through tax revenue and economic investment.

2.)   Question: How much capital is flowing into data center development?

Answer: Construction activity is expected to drive more than $700 billion in permanent debt originations over the next 30 months. AI-related bond issuance reached $250 billion in H1 2026 alone, with strong liquidity across both investment-grade and non-credit tenant deals.

3.)   Question: Which markets are driving growth?

Answer: Texas leads with 26 GW of total capacity, followed by Virginia at 13 GW. Frontier markets, including West Texas, Ohio, Louisiana and the Carolinas, now account for 77% of all capacity under development, while Northern Virginia remains the world's largest single data center market at nearly 7 GW.

4.)   Question: How tight is the supply-demand balance?

Answer: Vacancy has remained at 1% for three consecutive years despite unprecedented construction. With 66 GW under construction (95% pre-committed), most tenants securing space today are contracting for 2028 deliveries, underscoring the depth of forward demand.

5.)   Question: Who is driving demand beyond hyperscalers?

Answer: While hyperscalers account for 59% of demand, neoclouds have matured to 11% and pure-play AI companies represent 7%. Enterprise users managing hybrid portfolios are also struggling to secure capacity, with individual requirements ranging from 500 kW to 3 MW.

JLL (NYSE:JLL) is a leading global commercial real estate services and investment management company with annual revenue of $26.1 billion, operations in over 80 countries and a global workforce of more than 112,000 as of June 30, 2026. For over 200 years, clients have trusted JLL, a Fortune 500^® company, to help them confidently buy, build, occupy, manage and invest across a variety of industries and property types, including office, industrial, hotel, multi-family, retail and data center properties. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY. Powered by rich global datasets and leading technology capabilities, we provide coordinated, end-to-end delivery of real estate services for a broad range of global clients who represent a wide variety of industries. Through LaSalle Investment Management, we invest for clients on a global basis in both private assets and publicly traded real estate securities. For further information, visit jll.com.