North American Data Center Vacancy To Remain Near Zero for 'Several Years'
Data center demand in North America shows no signs of slowing, with vacancy remaining at 1% for the second consecutive year in 2025, according to a JLL analysis.
Particularly, forward demand remains deep and durable, JLL said. Most tenants securing space today are contracting for deliveries in 2027 or 2028, and available capacity is limited to small, fragmented blocks, offering little flexibility for large-scale deployments. The top five hyperscalers have announced $710 billion in planned 2026 capital expenditures.
More than 35 gigawatts of data center capacity are under construction across North America, an extraordinary volume roughly equivalent to the annual electricity consumption of the U.K. or Italy. Of this pipeline, nearly 60% is pre-leased, while the remaining 40% will be owner-occupied by hyperscalers — up from 20% in the 2010s.
Also, JLL expects vacancy to remain near zero for "several years" despite the surge in construction. This is thanks to 92% of the total pipeline under pre-committments.
Hyperscalers now account for about 65% of all demand, while enterprise tenants in finance, media and healthcare represent 27%, reflecting continued cloud migration and the growth of hybrid deployment models, according to JLL.
Data center geography trends are also shifting. Sixty-four percent of new capacity under construction is in frontier markets, including West Texas, Tennessee, Wisconsin and Ohio. In Texas, abundant energy, ample land and a business-friendly regulatory environment position the state to overtake Virginia as the largest North American data center market.
Extended grid interconnection timelines — averaging four years or more in many regions — continue to pose a challenge to developers. Those that deploy bridge solutions or permanent onsite generation, often fueled by natural gas or mobile turbines, can accelerate timelines and capture competitive advantage, said JLL.
Investment activity surged alongside demand. Stabilized loan volumes reached record highs in 2025, dominated by asset-backed security and single-asset single-borrower structures. The latter type of loans alone surpassed $11 billion last year, tripling 2024 levels.
Rents are rising sharply, with average North American rates climbing 60% since 2020. Current leases typically include annual escalations of 3% or more. JLL said tenants are experiencing sticker shock while landlords capture significant spreads on renewals. Rent growth through 2030 is projected at a 7% compound annual growth rate.
However, the report emphasizes caution about a potential "bubble," making it difficult to reconcile with 99% sector occupancy, particularly as the largest tenants rank among the most profitable and globally recognized companies.
Source: GlobeSt/ALM