Data Center Construction Hits New Heights, CBRE Reports

(Data center illustration courtesy of Cyrus One)

Demand from hyperscalers and cloud service providers fueled record leasing volume in the first quarter CBRE’s Global Data Center Trends report found.

Strong demand and limited availability in core markets led hyperscalers to turn to secondary markets, creating new hotspots like Richmond, Va. and Mumbai, India, CBRE reported. The global data center vacancy rate declined by 2.1 percentage points from a year earlier to a record low 6.6% in the first quarter.

“Rising demand from AI and hyperscale users is shrinking vacancy and operators with available capacity in key markets are commanding premium rates,” said Pat Lynch, executive managing director with CBRE’s Data Center Solutions. “As supply tightens in core markets, we’re seeing rapid growth and investor interest in emerging markets, which are becoming central to global deployment strategies.”

North America Claims Most Construction, Lowest Vacancy

Northern Virginia remains the largest North American data center market. “Atlanta and Phoenix are now the second and third largest data center markets in North America, respectively, surpassing Dallas and Silicon Valley, now fourth and fifth, for the first time,” the report said.

North America had the lowest average vacancy (2.3%) among global markets, followed by 7.4% in Europe, a record low for that region. Latin America vacancy dropped to 8.8% from 9.1% due to its proximity to hyperscalers and large users in the U.S.

“Power constraints in legacy markets are forcing hyperscalers to seek new frontiers for development, spreading workloads across multiple smaller locations with faster power availability timelines,” said Gordon Dolven, Director of CBRE Americas Data Center Research. “While improvements in fiber connectivity have reduced latency concerns and supported this shift, it’s power that ultimately determines where infrastructure can scale.”