CBRE: Data Center Supply Can’t Keep Up with Demand

(Illustration courtesy of Christina Morillo via pexels)

The data center market is expanding as demand from artificial intelligence uses outpaces available space capacity, pushing vacancy rates toward historic lows despite a wave of new supply, according to CBRE, Dallas.

CBRE’s Global Data Center Trends report found that global supply reached 16 gigawatts in the first quarter across the 16 largest data center markets, up 25% over the past year. But even with supply growth in all major regions worldwide, average vacancy fell to 6.7% from 8.3% a year earlier, indicating tightening market conditions worldwide.

Pat Lynch, executive managing director of CBRE Data Center Solutions, noted demand is outpacing even “aggressive” new supply increases across the globe. “This means companies can no longer assume capacity will be available when they need it,” he said. “Occupiers are having to secure space earlier, take what’s available from a capacity standpoint and prioritize markets with dependable power to support long-term growth.”

Northern Virginia, Atlanta, Dallas-Fort Worth and Chicago anchor U.S. growth, collectively adding 1,950.8 megawatts of new space since first-quarter 2025–a 33% gain that marks the fourth consecutive year of double-digit percentage growth. The report said the new supply has been quickly absorbed, pushing vacancy to extremely low levels, including 0.3% in northern Virginia and 1.8% in Dallas-Fort Worth. Strong leasing activity from large AI rollouts drove record absorption (2,236.2 MW), up 34% year over year.

AI demand is prompting occupiers to seek out larger facilities to support high-performance computing. “However, the construction pipeline does not provide substantial supply relief,” the report said. “As of Q4 2025, 80% of the space under construction in the top four U.S. markets was already preleased, further limiting near-term availability.”

At the same time, power availability and grid-infrastructure constraints are shaping where and how quickly new facilities can be built, particularly in major hubs such as northern Virginia, Chicago, London and Frankfurt. In the U.S., longer construction timelines will limit data center supply through 2030.

These dynamics are pushing prices higher, CBRE said. Chicago has the highest rental rates among major U.S. markets as of the first quarter, ranging from $200 to $230 per kW per month for a 250-to-500-kW requirement, with rents increasing 14.7% from the previous year.

“Limited power, land and infrastructure are slowing development and keeping vacancy near zero in some key U.S. markets,” noted Gordon Dolven, CBRE head of data center research for the Americas.  “These supply constraints will push pricing higher and shift new investment toward markets that can scale quickly.”