New findings from CBRE Group reveal a significant challenge in the North American data center market: while demand is booming, new facility construction is lagging due to issues with permits, zoning, and power supply. In 2025, the data center sector saw record activity, yet new builds decreased, indicating that the main hurdle is not diminishing demand but rather bureaucratic and logistical delays.
Pat Lynch, executive managing director at CBRE Data Center Solutions, pointed out that modern development projects are expanding to over 100 acres, necessitating positive relations with local municipalities. These connections are critical for developers seeking to enhance property tax revenue and job creation while minimizing local impact.
Despite the intense demand and record low vacancy rates of 1.4%, construction activity fell for the first time since 2020, attributed to extended permitting timelines and difficulties in power sourcing. As a result, planned projects are left in limbo, with construction capacity down 5.5% compared to the previous year, totaling approximately 5,994.4 MW.
CBRE’s recent report highlights several trends:
- The primary market supply of data centers surged 36% year-on-year to 9,432 MW, surpassing 2024’s growth.
- Rising market rental rates reflect supply constraints, increasing by 6.5% for medium-sized requirements and 12.5% for larger projects, influenced by factors like AI demand.
- Many areas are projected to have power capacity booked solidly until 2030, pushing new developments to consider onsite power generation alternatives.
The report also notes a pivotal shift in where data centers are constructed, moving from traditional urban clusters to more rural areas with ample space. Despite this possibility, challenges such as a shortage of skilled labor could hinder progress in these less populated areas.
Sanchit Vir Gogia from Greyhound Research cautioned that businesses expecting affordable data center pricing may be disappointed moving forward, as low vacancy rates signal a structural scarcity in supply. CEOLs and analysts alike stress the importance of considering long-term expansion rights and negotiating favorable terms to alleviate rising costs.
In tandem, the surge in AI adoption has intensified the urgency for data center infrastructure, with power availability and effective construction timelines being critical to meet growing demand. This change from a historically abundant market to a constrained environment requires enterprises to adopt strategic preparations for a more complex future in data center capacity expansion.
As the market dynamics evolve, the interplay of demand, supply chain limitations, and energy infrastructure will play a crucial role in shaping the future of data center development and availability.
For further details, you can refer to the CBRE’s North American Data Center Trend Report.
