The report details unprecedented demand levels, with colocation vacancy in North America declining to a new all-time low of 2.6% despite several years of record construction levels. Absorption totaled 4.4 GW in 2024 – a quadruple increase since 2020 – propelled by cloud providers, technology companies and finance sectors. In 2024, artificial intelligence (AI) represented about 15% of data center workloads, and by 2030, it could grow to 40%. AI will be a key source of growth for the sector.

88% of absorption in 2024 was in primary markets, with Northern Virginia rocketing back to the top spot with 847 MW of absorption in H2 and capturing 50% of all demand in North America. Chicago (308 MW), Phoenix (166 MW), Dallas-Fort Worth (123 MW) and Toronto (55 MW) round out the top five markets for absorption in the second half of the year.

“Data center rents continue to surge, with a 12% year-over-year increase in 2024 and an 11% CAGR since 2020, as landlords maintain strong negotiating leverage in a market with near-zero vacancy,” said Andrew Batson, Head of U.S. Data Center Research for JLL. “Tenants renewing five-year leases are experiencing significant sticker shock, facing up to 50% rent increases, and landlord concessions are becoming increasingly rare in this tight market.”

Construction activity remained robust in 2024, with more than 2.6 GW of colocation capacity completed during the year with nearly all the space absorbed at delivery. At the end of 2024, a record-setting 6.6 GW of colocation capacity was under construction, with 78% of the product under construction in primary markets. The pipeline of planned projects increased to 22.9 GW, confirming strong demand in established markets where power can be secured. Most markets have doubled or tripled in size since 2020, with Austin/San Antonio and Atlanta leading the U.S. in market growth followed by Northern Virginia, the Pacific-Northwest and Phoenix.

The North American power grid is taxed, resulting in challenges around capacity, scale and transmission. Data center projects are requiring more power each year, as new data centers are now commonly 100 MW, with some projects requesting up to 1 GW of power. Even among the regional utilities with power availability, few have capacity available at the scale required to support modern data centers.

“Channeling immense electrical capacity to a single project requires significant planning and coordination, and, with grid connection wait times averaging four years and potentially costing tens of millions of dollars in lost profits, data center operators are increasingly turning to alternative energy solutions,” said Matt Landek, Division President, U.S. Data Center Work Dynamics, who also leads JLL’s Data Center Project Development and Services. “Natural gas turbines have emerged as the go-to bridge solution, offering affordability, accessibility and rapid deployment. Some projects are even considering permanent on-site natural gas turbines for off-grid autonomy, despite the cost premium and emissions monitoring requirements.”

While grid power is the most affordable, reliable and accessible source of electricity in North America, green-energy solutions like solar, wind, fuel cells, hydrogen, nuclear and geothermal are in various stages of development for data center usage. Some show promise as a primary power source, others could play a role as supplemental green energy.

With lead times still 50% above pre-pandemic levels, data center equipment supply chains continue to be challenged but are improving, with most equipment available for delivery in six months or less. Generators, switchgears and transformers take an average of 11 months, depending on manufacturer and model. Reshoring of data center equipment manufacturing is expected to help reduce lead times, but not until 2026-2027 since most of these new manufacturing facilities are currently under construction. Data center operators must develop agile approaches and robust risk mitigation plans.

The report also examines emerging data center markets across North America, as developers push into new territories searching for power and land. Emerging markets in West Texas, Louisiana, Alabama, New Mexico, Nebraska and Iowa are attracting significant investment from hyperscalers and colocation providers. Hyperscalers are typically the first movers, followed by colocation providers as a critical mass develops.

Cities Charlotte, N.C., are seeing surges in demand from both developers and end users. Over the last 24 months, hyperscalers have acquired roughly 1,900 acres across the Columbus, Ohio, region alone, and Minneapolis, Minn., has emerged as a data center destination due to its robust power generation from existing power plants.

“While core markets remain preferred and are seeing strong growth, the search for power is leading to rapid development in new regions,” Cvengros added. “We’re seeing significant activity in markets adjacent to established data center hubs like the I-35 Corridor in Texas, northwest Indiana and central and southern Virginia, creating opportunities and challenges for both operators and communities.”

Your data has never been more critical, and neither has your data center partner. From site selection and land acquisition to upgrades and facilities and energy management, JLL’s team of dedicated technical experts are trained and experienced in every phase of the data center lifecycle to help you scale, optimize and maintain efficiencies in your data center strategy. Our solutions enable your business to make higher-quality decisions and enter new markets with reduced friction through local market expertise, business intelligence, proprietary data and cutting-edge technology tools. To learn more, visit us.jll.com/data-centers.

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