Commercial Real Estate News
Data Center Demand Shatters Multiple Records in 2025 Amid AI Boom
North America's data center market surged to unprecedented levels in 2025, driven by hyperscale cloud operators and AI workloads that pushed absorption and lease rates to historic highs, according to CBRE.
Across the eight primary markets, tenants took nearly 2,500 megawatts (MW) of space last year -- a 38% increase from 2024 -- underscoring the rapid adoption of AI-powered tools and digital services. Northern Virginia reclaimed its leadership position after Atlanta led in 2024, recording 1,102 MW of net absorption, more than double the previous year. Its total inventory now exceeds 4,000 MW, roughly three-and-a-half times the combined capacity of all secondary U.S. markets.
"The surge in leasing across North America reflects how quickly business and consumers are adopting AI-powered tools and digital services," said Pat Lynch, Executive Managing Director of CBRE Data Center Solutions. "Demand is outpacing supply, while power and supply chain shortages are reinforcing a power-first approach that prioritizes sites with the fastest path to power. Ultimately, unlocking additional supply will depend on power availability timelines, approvals for on-site generation, and greater investment in transmission infrastructure."
National vacancy fell to 1.4% even as total capacity climbed 36% to 9,432 MW, highlighting the speed at which newly built space is being absorbed. Lease rates rose 6.5% year-over-year to $194.95 per kilowatt per month, marking the fourth consecutive annual increase.
Construction activity, however, slowed for the first time since 2020. Capacity under development fell to 5,994 MW at year-end, down from 6,350 MW in 2024, as permitting delays, zoning approvals, and power constraints extended project timelines.
Emerging markets are gaining attention as operators look for land, permitting flexibility, and accessible power. "The everyday use of AI, from data analysis to personalized recommendations, requires fast response times and servers located close to population centers," said Gordon Dolven, Data Center Research Director at CBRE. "Combined with growing interest in markets that offer available land and power, this is spurring investment beyond traditional hubs and reshaping the North American data center market."
Atlanta continues to expand rapidly, with more than 2,000 MW under construction, while Dallas-Fort Worth became the third North American market to surpass 1 gigawatt of total inventory, joining Northern Virginia and Atlanta.
Analysts say the combination of soaring AI demand, limited available land, and power infrastructure constraints is reshaping the continent's data center landscape. Future growth will hinge less on traditional real estate factors and more on the speed at which utilities can deliver reliable electricity, a shift that is likely to define the next generation of North American data centers.
