CHICAGO, August 18, 2025 – The North America knowledge middle colocation market has reached a crucial tipping level, with emptiness charges plummeting to an unprecedented 2.3 p.c amid relentless demand for digital infrastructure, in accordance with JLL, a business actual property and funding administration firm.
JLL’s “North America Knowledge Heart Report – Midyear 2025” reveals how, as stock grows to a file 15.5 GW, the sector continues its explosive progress trajectory whereas grappling with extreme capability constraints and vitality sourcing challenges.
Northern Virginia maintains its place as North America’s largest knowledge middle market. With 5.6 GW of capability, it’s greater than triple the dimensions of Dallas-Fort Price, the second-largest market at 1.5 GW. The report additionally highlights how cloud suppliers and expertise firms proceed to dominate knowledge middle demand, accounting for 65 p.c of all leasing exercise.
“The colocation market is experiencing unprecedented demand strain beneath an more and more nerve-racking setting,” mentioned Andy Cvengros, Government Managing Director, Co-Lead of U.S. Knowledge Heart Markets, JLL. “The primary half of the 12 months was riddled with disruptions, together with the DeepSeek information firstly of the 12 months and the potential influence of tariffs on demand and development. Regardless of the turbulence, the sector posted one other record-shattering efficiency.”
The market absorbed a formidable 2.2 GW in H1, with half of this exercise concentrated in Northern Virginia (647 MW) and Dallas-Fort Price (575 MW). Chicago (368 MW) and Austin/San Antonio (291 MW) additionally confirmed important leasing exercise, placing the sector on tempo to exceed 2024’s file absorption ranges.
“What we’re seeing throughout main markets is nothing wanting extraordinary,” mentioned Curt Holcomb, Managing Director with JLL’s international Knowledge Heart Options follow staff. “In Dallas-Fort Price, for instance, there’s unparalleled competitors for restricted capability. Main cloud suppliers are securing energy reservations years upfront, and the event pipeline has expanded to over 1 GW beneath development. In the meantime, Austin has emerged as a real Tier 1 market with almost 921 MW of stock and one other 341 MW beneath development, representing a 500 p.c progress since 2020.”
The development pipeline has ballooned to 7.8 GW, roughly 10 occasions the amount from 5 years in the past. Phoenix (1.3 GW) leads improvement exercise adopted by Chicago (1.18 GW) and Atlanta (1.11 GW) main improvement exercise exterior Northern Virginia.
Extra regarding for these searching for house is that 73 p.c of all capability beneath development is already preleased. Excessive preleasing has remained constant for the previous two years, signaling significant market reduction stays years away.
“The times of build-it-and-they-will-come are lengthy gone,” mentioned Matt Landek, Division President, U.S. Knowledge Heart Work Dynamics, who additionally leads JLL’s Knowledge Heart Mission Improvement and Companies. “What we’re seeing now could be ‘commit-before-it’s-built-or-you-won’t-get-in.’ That is basically altering how firms strategy their knowledge middle methods. Enterprise customers who as soon as deliberate 6 to 12 months upfront are actually securing capability and their services and operations groups 18 to 24 months earlier than their supposed deployment dates, generally even earlier.”
Whereas established markets proceed to dominate the panorama, rising markets are experiencing dramatic progress. Columbus has seen an astounding 1,800 p.c progress since 2020, whereas Austin/San Antonio has grown 500 p.c from a smaller base throughout the identical interval. These rising markets are benefiting as energy constraints in main markets push improvement elsewhere.
Industrial electrical energy charges have risen almost 30 p.c since 2020, reaching a median of 9.7 cents/kWh in H1 2025. This growing value strain has pushed improvement towards markets with decrease energy prices corresponding to Salt Lake Metropolis (5.7 cents/kWh) and Denver (6.4 cents/kWh).
The common wait time for a grid connection throughout the U.S. is now 4 years. Energy delays stay a big hurdle in assuaging provide constraints. Nevertheless, there’s a silver lining, this impediment can also be stopping a bubble from forming within the sector.
“Energy has change into the brand new actual property,” mentioned Andrew Batson, Head of U.S. Knowledge Heart Analysis at JLL. “With emptiness successfully at 0 p.c, nearly all absorption is the results of preleasing with supply occasions extending past 12 months. The market has been rising at a outstanding 20 p.c CAGR since 2017, and our improvement pipeline knowledge suggests this tempo will proceed by 2030, with the colocation market doubtlessly increasing to 42 GW of capability.”
The information middle sector continues to solidify its place as one of the crucial favored actual property asset courses, with market capitalization progress of 161 p.c since 2019, second solely to industrial properties. This outstanding progress is pushed by insatiable tenant demand, restricted provide and rising rents, making a compelling funding thesis that continues to draw new capital to the sector.
“There was a big enhance within the quantity of capital deployed into knowledge middle tasks beneath development or reaching stabilization within the first half of 2025 in comparison with the earlier 12 months” mentioned Carl Beardsley, Senior Managing Director, Knowledge Heart Chief, JLL Capital Markets. “We’re seeing developments with long-term leases attaining as much as 85 p.c loan-to-cost from senior lenders at aggressive spreads, whereas new entrants to the lending market are pushing larger flexibility in phrases, larger leverage choices and more and more artistic buildings at stabilization.”
The debt markets for knowledge facilities are experiencing important growth, with asset-backed safety (ABS) and single-asset single-borrower (SASB) mortgage exercise growing for the third consecutive 12 months. The primary half of 2025 noticed 14 ABS offers totaling $7.7 billion and 4 SASB offers totaling $5.7 billion, substantial will increase from the identical interval in 2024. In the meantime, asset-level funding gross sales remained comparatively muted at $754 million throughout 23 transactions in H1 2025, with common cap charges holding regular round 6 p.c, similar to premium industrial and multi-housing properties.
Wanting forward, JLL anticipates the supply-demand imbalance to persist over the following a number of years. Initiatives already beneath development are 73 p.c preleased, and whereas a further 31.6 GW of capability is deliberate, that provide might be phased over 5 years or extra. Northern Virginia leads all markets with 5.9 GW deliberate, adopted by Phoenix (4.2 GW), Dallas-Fort Price (3.9 GW) and Las Vegas/Reno (3.5 GW).
“North America may see $1 trillion of information middle improvement between 2025 and 2030,” Batson added. “Primarily based on our forecast, greater than 100 GW of colocation and hyperscale capability may break floor or ship over the following 5 years. These projections don’t embrace the potential upside of quantum computing, which we see as a sector accelerant over the following 5 to 10 years.”
The mix of AI adoption, digital transformation initiatives and cloud migration has created an ideal storm of demand that the trade merely can not meet rapidly sufficient, resulting in the present provide crunch and making ahead planning extra essential than ever for enterprises searching for knowledge middle capability.
