Data Center Market Trends

Data center inventory in North America grew by a record 43% over the past 12 months, but the region’s vacancy rate remains near historic lows at just 4.2%, according to new data from the CBRE Global Data Center Trends report for 1Q 2025. In other words, developers are deploying more new data center space than ever, but are still unable to keep up with demand, according to CBRE Data Center Solutions. “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 for CBRE’s Data Center Solutions. Despite ongoing power supply challenges, Northern Virginia remained the largest market, expanding its inventory by 523 megwawatts (MW) over the past 12 months, with a vacancy rate of just 0.76%. The average rental rate increased by 15%, driven by preleasing of facilities scheduled for delivery as far out as 2028. The Top 5 U.S. markets continued to evolve, as Atlanta and Phoenix are now the second and third largest data center markets in North America, surpassing Dallas and Silicon Valley, now fourth and fifth. “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.” Here's a chart that illustrates the supply issues: Of the 7 markets with the lowest vacancy rates, all but Singapore are in the Americas. Read the report here: https://lnkd.in/eW3aVhQP

The Netherlands is exploring innovative ways to make data centers more energy-efficient by developing floating data centers that use canal water for cooling. Data centers require enormous amounts of electricity, not only to power servers but also to cool the equipment and prevent overheating. Traditional data centers rely heavily on air-conditioning systems, which consume significant energy and increase operational costs. To reduce this energy demand, engineers in the Netherlands have proposed floating server facilities that use nearby water sources such as canals, lakes, or ports for natural cooling. The concept works by circulating water from the canal through specialized heat exchangers. The water absorbs heat generated by the servers and carries it away, reducing the need for energy-intensive cooling equipment. This method can significantly lower energy consumption and reduce the environmental footprint of large-scale computing infrastructure. Floating data centers also offer additional benefits such as modular construction, flexible deployment, and efficient land use in densely populated cities. The Netherlands, known for its extensive canal networks and expertise in water engineering, provides an ideal environment for testing this approach. As global demand for cloud computing, artificial intelligence, and digital services continues to rise, innovative cooling solutions like floating data centers could play a major role in making the world’s digital infrastructure more sustainable and energy-efficient. #DataCenterInnovation #GreenTechnology #SustainableComputing #TechInfrastructure #FutureEngineering

Some of the best opportunities in digital infrastructure are hiding in plain sight. Across the country, former factories, old mills, and legacy industrial sites sit idle. Many communities want to bring them back to life, but the cost of environmental cleanup, power upgrades, and infrastructure investment can be difficult to justify. Data centers can change that. When done well, these projects place modern infrastructure on land that already has an industrial history, where they use less water and have less environmental impact than the operations that came before. They also bring new capital and a stronger tax base to the communities they enter — and they create thousands of construction jobs and hundreds of high-quality, long-term operational roles. A perfect example is our NEO-01 campus in Sandusky, Ohio, featured in the video below. It replaced an old ball bearing plant with a modern facility built around sustainable design principles — including efficient resource use and reduced water consumption — that minimize its environmental footprint. Revitalizing legacy industrial land lets us build the infrastructure this era demands, while making sure the communities we operate in share in that progress.

The Texas PUC released proposed requirements for large loads (>75 MW) trying to connect in ERCOT. ⚡️ The rules could re-price every data center deal. Here’s the financial reality for developers. 1. The "Intermediate Agreement" (signed first with the utility): ➡️ $50k per MW requested peak demand upfront security (a 500 MW campus = $25M) ➡️ Proof of site control (5-year minimum lease) ➡️ Project Maturity Data: You must provide geotechnical plans, air/water permit status, and a phased energization schedule. 2. Interconnection costs ➡️ $50k per MW contracted peak demand ➡️ You pay 100% of direct interconnection costs (CIAC). No allowances. ➡️ Withdraw or miss a milestone? The utility takes your security to cover their costs. After that, you only get 20% of the remaining balance back. The other 80% is forfeited to the utility’s rate base. 3. The 5-Year Rule: You don't get your security back until you sustain peak demand for 5 years. ERCOT’s regulatory decisions carry disproportionate weight because Texas is the largest competitive power market in the country and the single largest destination for new AI infrastructure investment. Developers operating in PJM or MISO should be reading this Texas rulemaking as a leading indicator of where their own interconnection economics are heading. ❗️ If you’re a developer trying to originate new projects in ERCOT, the comment period on this ends April 17th. I break down the full implications of these proposed rules in this week’s Power Signal. Read my full take here: https://lnkd.in/ebytwuPA Subscribe for free ➡️ powersignal.substack.com #datacenters #AI #powerinfrastructure #energy #energyinfrastructure #ERCOT

Wait! Wait! Not that power!! When the White House gathered the biggest names in tech last spring to sign the Ratepayer Protection Pledge, the ask was simple: build, bring, or buy your own power. Don't make American households pay for your data centers. A reasonable ask. But it turns out, the use of the word "power" wasn’t as precise as it needed to be. And that has implications for ratepayers. There is currently 2 GW of behind-the-meter resources fueling data centers and virtually all of it powered by natural gas. But the pipeline is enormous. Cleanview ’s most recent analysis identified roughly 90 GW of generation capacity across all announced behind-the-meter projects. Of the generation equipment that could be identified through permits and site plans, approximately 75% is natural gas-fired. Why does this matter? As Energy Innovation Policy and Technology LLC experts recently noted, it is “counterintuitively data centers' independence from the grid - coupled with their use of natural gas - that will hike energy costs for homes and businesses.” Off-grid gas plants still burn fuel, drive up commodity prices, and force utilities to build backup capacity that ratepayers end up financing anyway. "Bring your own" without a clean requirement isn't a solution. It just shifts the burden back to ratepayers. Wholesale power costs in PJM hit $136.53/MWh in Q1 — up 76% from a year ago, driven by data center load growth. Data centers were responsible for 63% of the price increase in the last PJM capacity auction, translating to $9.3 billion recovered from customers in higher electricity rates. The pledge was supposed to stop that. Gas behind the meter won't. It’s why FERC is considering the large load question at this exact moment. So let me suggest an amendment: Bring Your Own Clean Energy. And here's the good news — some hyperscalers are already showing exactly what that looks like, in three different ways. The VPP model. Google just struck a first-of-its-kind deal with Voltus — a three-year agreement to aggregate up to 100 MW of distributed energy resources into a Google-funded virtual power plant in PJM, coordinating batteries, smart thermostats, and flexible assets to deliver clean capacity during peak hours. The utility-scale procurement model. Meta and Enbridge are building structurally: a 365 MW solar and 200 MW/1,600 MWh battery storage project near Cheyenne, Wyoming, structured under a large-load tariff explicitly designed to serve data centers without affecting retail electricity rates. The own-it model. Alphabet went furthest — acquiring clean energy developer Intersect Power for $4.75 billion, bringing multiple gigawatts of solar and storage projects directly onto its balance sheet to power its data centers. The Ratepayer Protection Pledge got the framing right. Now it's time to make clean non-negotiable.

Datacenters are the foundation of our digital lives. They also create opportunities to demonstrate what’s possible when sustainability is treated as a design principle, not an afterthought. Teams around the world at Microsoft are tackling the energy and resource challenges of cloud computing head-on. In Europe alone, we’re implementing a variety of solutions: 🌱 Boosting biodiversity: Datacenters in the Netherlands are being designed with biomimicry principles, planting 150 native trees and 2,300 square meters of vegetation to restore habitats, improve water management, and reduce environmental impact. 💧 Saving water: We’re building datacenters in Spain with closed-loop cooling systems that fill once during construction and then continuously recirculate water between servers and chillers, eliminating the need for additional water and dramatically reducing consumption. 🔁 Cutting carbon: A new datacenter in Wales is being built using materials from a shuttered radiator factory, avoiding hundreds of tons of CO₂ emissions through smart reuse. ⚡ Stabilizing the grid: Across the Nordics, battery-backed systems help maintain steady grid frequency, making renewable energy easier to integrate and supporting a more resilient power supply. 🔥 Heating homes and businesses: Recovered heat from datacenters in Finland will help warm up to 250,000 homes and businesses through a municipal heating system. Denmark is setting up a similar system to extend the benefits of sustainable heating to more communities. Every day I am blown away by the creativity and ingenuity of these teams and our local partners. Check out these prime examples of this work. Read the latest story from Source to learn more: https://lnkd.in/gUtARfJ3 

Something’s happening in Navi Mumbai! It's a data centre vs residential tug-of-war. Every land transaction is setting newer pricing benchmarks ✨ Land prices here are no longer moving annually. They’re moving monthly. With residential now permitted, land has suddenly acquired a new identity. 🏗️➡️🏠 This is where the psychology of money gets interesting. When land gets a second life, every previous use has to be re-evaluated for its relevance. For many years, Thane-Belapur belt in Navi Mumbai had quietly become India’s data center nerve centre. Availability zones were planned, capital infused, power procured, fiber laid ⚡🧵 Over the last year, there is a change in thought pattern with developers and land owners. Data centres are no longer just competing with each other. They’re competing with homes. Same land. Very different economics. Very different emotions. Residential brings: ✨ faster liquidation 🧠 ✨ scale and FSI utilization 🏘️ ✨ social infrastructure Data centres bring: ⚡long-term economic infrastructure 🧱 ⚡low employment optics ⚡heavy utility consumption Globally, we’ve seen this story before 🎥 In Northern Virginia’s Data Center Alley, as residential crept closer, prices exploded and approvals slowed. But the availability zone didn’t shut down. In Arizona, large hyperscale projects were redirected after community and cost pressures. Moving closer to industrial and airport-linked corridors instead. Just silent strategy repositioning. What happens to existing zones? They are made to sweat harder. The sunk capex, network effects, power density and latency advantages are too valuable to walk away from. So operators and hyperscalers adapt. What usually happens next isn’t dramatic. It’s incremental. So, here’s my view- ✔️ Data centres will continue to compete with residential for the right land parcels for the next two years. As long as land remains available and prices are still within reason ⚖️ ✔️ Existing sites keep operating, often denser and more optimized ⚙️ ✔️ But incremental large scale hyperscale capacity begins to look outward, creating new zones, new rings, new corridors 🌍 Navi Mumbai, in that sense, is entering a new phase of maturity. The question is - How long can data centres and residential continue bidding for the same land before the next availability ring naturally forms? Because capital will eventually recalibrate. And cities, like people, don’t change overnight. They evolve - zone by zone, decision by decision. 🧠 Are we watching Navi Mumbai turn into a multi-ring data centre market in real time? What are your thoughts? PS: Pic clicked by me - Navi Mumbai, my favourite city in the country 🌆

We teamed up with Morgan Friberg at Shovels to analyze 6,000+ permitting and zoning decisions from Q1'26. Three trends stood out: 1/ Cities are writing their own housing checks. This was the most surprising one. Across very different states with very different politics, cities used Q1 to commit municipal capital (bonds, sales-tax revenue, direct land contributions, housing trust funds) to affordable housing. • Ann Arbor issued $35M in bonds for a 330-unit affordable tower • Wichita passed a $120M housing endowment from sales tax • Madison added $4M in GO borrowing for strategic land banking • Albany rewrote inclusionary zoning to feed a Housing Trust Fund • Fresno wrote $22M+ in city checks for two mixed-income projects Seven cities, five states, no two financing structures alike. They share one assumption: waiting for LIHTC or HUD is no longer a viable strategy. 2/ The data center red light came on outside the Sun Belt. If Q3 2025 was the quarter of the green light, Q1 2026 was the reversal. Madison enacted a moratorium. Caledonia Township, MI matched it. Naperville denied a project in a historically tech-friendly corridor. Provo's council voted 7-0 to deny the underlying zoning change for what would have been the first project under its new Data Center Overlay. The pattern: custom overlays, moratoriums while codes get rewritten, and outright denials in legacy industrial sites near residential. Underwriting data centers in 2026 requires a local political strategy, not just a fiber map. 3/ Conversions are now the template, not the exception. Six conversions across five states in a single quarter. Plus a hospital campus. • Walnut Creek: 422 townhomes replacing 330,000 sqft of office (Builder's Remedy) • Provo: 1,383 units replacing a dead mall • Sunnyvale: 329 units replacing six industrial/office buildings • Orange County, FL: ~900-bedroom student housing on underutilized office entitlements • Saint Paul: TIF district financing a downtown hospital campus redevelopment A year ago these projects were notable exceptions. Now they're the baseline. The full Q1 2026 report covers two more themes: stadium districts as mixed-use entitlement vehicles, and cities stretching local regulatory tools well beyond their original purpose. Link in comments.

The AI race will drive a fierce data centre land rush. In 2026, the scarcest resource in AI won’t be talent or chips – it will be land for data centres. Industrial land prices for data centres are already surging worldwide. Northern Virginia, the world’s largest data centre hub, now sees plots trading above $6m (£4.4m) per acre. Europe is following suit, with hyperscalers like NVIDIA committing over €50bn to new real estate projects. In the Nordics, demand could quadruple by 2032, fuelled by low energy costs, cool weather and available land. A Deloitte report ranks data centers as a top real estate opportunity for 2026. In nine major global markets surveyed, 100% of new construction is already pre-leased. "AI infrastructure is the foundation that will support the growth of the new economy,” wrote Victor Arnaud, president of Equinix Brazil, announcing a million-dollar investment in clusters for São Paulo and Rio. This land rush will bring ripple effects – commercial zones, housing markets and tech jobs will likely surge near AI hubs. But environmental concerns loom. In parts of Latin America, drought-stricken regions are courting thirsty data centres, sparking alarm among environmental groups and residents. And for investors, the risks are high. Venture capitalist Rahul Mathur warns that tech depreciation means you can’t model cashflows like a rental asset. “Data centres aren’t typical real estate," he says. For professionals, keeping an eye on these dynamics could be critical – and lucrative. “If I were 25 today, what business would I get involved in? l'd focus on two massive opportunities: Al implementation and data centre development,” businessman Kevin O'Leary says in a LinkedIn video. “This is where the future's heading.” ✍ Lucas Carvalho 📷 Getty Images 💡 This is one of a several ideas LinkedIn News is highlighting in our annual list of predictions. Read it here: https://lnkd.in/BI26UnitedKingdom Join the conversation in the comments or share your own prediction in a post or video with #BigIdeas2026.

China just launched the world’s first commercial underwater AI data center—and it’s a bold move we can’t ignore. This is big: 400 servers submerged 30 meters off the coast of Hainan, generating the computing power of 30,000 gaming PCs. It's already live, and it's tackling sustainability head-on—but it also raises serious questions. There are clear benefits: These underwater modules cut energy use by 30–60%, leveraging seawater for cooling instead of energy-intensive AC systems. That’s a potential $1.2M saved per unit each year and 12,000 tons of CO₂ avoided. No land required—100 modules could save 68,000 m²—and they’re powered by wind and nuclear energy. Ten companies are already using them for AI and gaming. With 2024 marking a 1.5°C global temperature rise, this kind of innovation is timely. The compromise: Installing server pods underwater brings potential harm to marine life—noise, heat, and ecosystem disruption. A 1°C increase in ocean temps can shrink fish size by up to 30%. And while small pilots worked, this is commercial scale. Some say this move is more about AI dominance than climate solutions. The debate: Land-based data centers consume 416 TWh per year—and AI demand is doubling every 100 days. Underwater hubs could claim 15% of the market by 2030, cutting emissions—but at what environmental cost? We’re not just choosing between tech platforms. We’re choosing the future we want. The conclusion: We don’t have to pick sides yet. But we do need to ask the right questions. Sustainability isn’t just about energy—it’s about ecosystems, equity, and long-term resilience. Business leaders, investors, and technologists have a role to play in ensuring progress doesn’t come at the planet’s expense. We need the right data to measure the real impact and decisions could follow. #ClimateChange #Innovation #DataCenters #EnergyEfficiency #Sustainability #BusinessLeadership #MarineEcosystems #AI #CenterforSustainableFuture Kearney Kearney Middle East and Africa