Data Center Vacancy Hits Historic Low, JLL Reports
(Illustration: JLL)
The data center colocation market has reached a critical tipping point, with vacancy rates plummeting to an unprecedented 2.3% amid “relentless” demand for digital infrastructure, according to JLL, Chicago.
JLL’s North America Data Center Report – Midyear 2025 shows the data center sector continues its explosive growth trajectory–inventory reached a record 15.5 GW–and is grappling with severe capacity constraints and energy sourcing challenges.
Northern Virginia maintains its position as North America’s the largest data center market. With 5.6 GW of capacity, it is more than triple the size of Dallas-Fort Worth, the second-largest market at 1.5 GW.
The report also highlighted how cloud providers and technology companies continue to dominate data center demand, accounting for 65% of all leasing activity.
“The colocation market is experiencing unprecedented demand pressure under an increasingly stressful environment,” said Andy Cvengros, executive managing director and co-lead of JLL’s U.S. Data Center Markets. “The first half of the year was riddled with disruptions, including the DeepSeek news at the beginning of the year and the potential impact of tariffs on demand and construction. Despite the turbulence, the sector posted another record-shattering performance.”
JLL found absorption is outpacing supply in a record market run.
The market absorbed an impressive 2.2 GW in the first half, with nearly half of this activity concentrated in Northern Virginia (647 MW) and Dallas-Fort Worth (575 MW). Chicago (368 MW) and Austin/San Antonio (291 MW) also showed significant leasing activity, putting the sector on pace to exceed 2024’s record absorption levels.
Curt Holcomb, managing director with JLL’s data center solutions team, called what’s happening across primary markets “nothing short of extraordinary.” For example, in Dallas-Fort Worth, there is “unparalleled” competition for limited capacity. “Major cloud providers are securing power reservations years in advance, and the development pipeline has expanded to over 1 GW under construction,” he said. “Meanwhile, Austin has emerged as a genuine Tier 1 market with nearly 921 MW of inventory and another 341 MW under construction, representing a 500% growth since 2020.”
JLL calculated the construction pipeline has ballooned to 7.8 GW, approximately 10 times the volume from five years ago. Phoenix (1.3 GW) leads development activity followed by Chicago (1.18 GW) and Atlanta (1.11 GW) leading development activity outside Northern Virginia.
“More concerning for those seeking space is that 73% of all capacity under construction is already pre-leased,” the report said. “High preleasing has remained consistent for the past two years, signaling meaningful market relief remains years away.”
