North America Data Center Trends H2 2025

• The average asking rate for a 250-to-500-kW requirement in primary wholesale colocation markets rose by 6.6% year-over-year to a record $196.25 per kW/month. While rate growth continued in H2, the pace slowed after three consecutive years of double-digit growth.
• Pricing for 3-to-10-MW requirements jumped by 12.5% year-over-year, as competition intensified for large contiguous space with scalable power and connectivity.
• In Silicon Valley, volume-based pricing discounts for large tenants have been significantly reduced or eliminated amid strong demand, intensifying pricing pressures.
• The surge in high-density AI and GPU workloads amplified demand for advanced infrastructure. This allowed operators with AI-optimized facilities (including liquid cooling and high-power density racks) to capture rent premiums over conventional colocation space.

Figure 3: Average Asking Rental Rate with Y-o-Y % Change for Primary Markets

• Data center investment activity was driven by sustained M&A activity and significant structured financing for AI-factory mega-campuses in tertiary markets.
• Booming neocloud demand has created new challenges and opportunities, including increased yield potential for investors. However, these providers require heightened underwriting scrutiny given the sector’s history of investment-grade credit tenants.
• Investment volume is expected to increase substantially in 2026, fueled by large-scale development completions. Growing development pipelines are expected to continue driving demand for construction financing, joint-venture equity and forward commitments for new data centers.
• Despite an uptick in year-end transaction activity, annual investment volume for operational data centers fell by nearly 50% year-over-year to approximately $3 billion. Persistent supply chain, power delivery and entitlement challenges extended transaction timelines.
• Record data center demand and formidable new supply barriers strengthened the sector’s robust market fundamentals in H2 2025.

Notable H2 2025 North American Capital Markets Activity

• Debt, JV and equity investment remained active in H2 2025.
• Annual issuance of single-asset single-borrower commercial mortgage-backed securities (SASB CMBS) hit an all-time high of $11.2 billion. Data center deals accounted for approximately 11% of total SASB CMBS issuance, another all-time high.
• The financing market saw more than $8 billion of CoreWeave-leased financing for build-to-suit construction projects in H2 2025.
• Powered shell facilities continued to appeal to a wide range of investors, with numerous transactions occurring in 2025 concentrated in the Northern Virginia market.
• An investor consortium led by BlackRock, MGX and AI Infrastructure Partnership agreed to acquire Aligned Data Centers from Macquarie Asset Management for $40 billion. Upon closing, it will be one of the largest transactions to date for global data centers by enterprise value.
• Meta formed a joint venture with Blue Owl Capital to finance the development of its $27 billion Hyperion data center campus in Richland Parish, LA.
• OpenAI, Oracle and SoftBank expanded their Stargate project to nearly 7 gigawatts (GW) of planned capacity and more than $400 billion in investment over the next three years.
• Apollo Funds completed its acquisition of Stream Data Centers, securing a development pipeline exceeding 4 GW.
• CoreWeave acquired a $322 million data center project in Kenilworth, NJ, and is planning a $1.8 billion expansion.
• AI inference deployments are expected to drive the next wave of data center utilization in major markets across the country. The December 2025 sale of 1001 Third Ave. South in Minneapolis marked one of the first transactions of this type of facility.

Figure 4: Largest Annual Changes in Under-Construction Totals for Primary Markets

• Rental rates continued to rise due to the limited availability of powered land and capacity constraints in key markets. Rising costs of capital, land values, construction and tariffs contributed to increased rents, particularly for build-to-suit projects. Rent growth is expected to continue outpacing inflation for the next two to five years.
• Cap rates remained stable as strong demand for quality assets continued to surpass supply. Cap rates for Class A facilities typically ranged from 100 to 150 basis points (bps) above the 10-year Treasury yield. Hyperscale and neocloud operators’ increasing capital-expenditure budgets resulted in some negative sentiment and credit default swap adjustments.
• Sites offering power access within 18 to 36 months for greenfield development are highly sought after, driving significant investment from owner-users and developers in tertiary markets. The power shortage is escalating site costs, especially in infill areas. Site costs for recent and pending transactions in Northern Virginia and the Northeast exceeded $8 million per acre.
• Both owner-users and developers are prioritizing access to larger sites with over 200 MW of power.
• New power allocation applications exceeded hundreds of megawatts nationally, though specific figures vary widely. However, some market participants are questioning how much power these proposed developments will use.
• Large cryptocurrency miners are increasingly looking to monetize available power capacity through partnerships or by building their own data centers.
• Grid-power capacity for existing projects is largely booked through 2030 in most markets. This is driving new projects to incorporate on-site power like natural gas generators, wind turbines, hydrogen fuel cells and solar panels with battery energy storage. Small modular reactors are expected to become a practical on-site power source as early as 2035.
• Clear guidelines for permitting behind-the-meter power and access to natural gas are becoming critical in site selection.

Figure 5: Primary Markets Net Absorption, Preleasing & Under Construction

Hyperscaler & AI Demand

• Hyperscaler and AI development continue to fuel the construction of high-capacity fiber and conduit infrastructure.
• Many new deployments are establishing new medium- and long-haul pathways, significantly improving fiber connectivity in towns and cities that lacked robust access.

Regional Development Highlights

• West Texas — Numerous developments are underway, with several providers constructing thousands of route miles of new fiber to connect with core long-haul networks and other data center markets. Key providers include Fiberlight, Globelink Holdings, Flo Networks, Metronet, Big Bend Telecom and Zayo.
• Columbus, OH — This market continues to expand its fiber and interconnection capabilities. Zayo established a new route connecting hyperscale campuses in the market to Chicago, and its existing route to Ashburn, VA, was overbuilt to meet increasing hyperscale demand. Lightpath is also building a 102-mile ring to support hyperscale interconnection.
• Chicago to Columbus and Minneapolis — Zayo is building two significant networks to link hyperscale campuses in Chicago to Columbus (385 miles) and Minneapolis (520 miles). These projects will provide alternative, medium-haul fiber routes between these markets.
• Hillsboro to Minneapolis (Northern Link Route) — Ziply completed a high-capacity route connecting Hillsboro, OR, Western and Eastern Washington, Idaho, Montana, the Dakotas and Minneapolis. This route offers an alternative to Canadian long-haul systems and interconnects most hyperscale campuses along its path.
• Alabama Infrastructure Expansion — Uniti is extending its core infrastructure to support hyperscale and AI operations in Huntsville, Cuba, Mobile and Montgomery.

Figure 6: Total Inventory vs. Under Construction by Primary Market, H2 2025

Figure 7: Total Inventory vs. Under Construction by Secondary Market, H2 2025

Vacancy Rates

Vacancy rates are expected to remain at record lows amid limited new supply. Power procurement timelines remained challenged across the U.S. due to the abundance of greenfield development announcements.

Primary Market Pricing

Requirements between 250 and 500 kW are expected to exceed $200+ per kW/month in primary markets, while some existing inventory in smaller markets may offer lower prices to attract occupiers.

Market Inventory Shifts

Southern California, Austin–San Antonio and Central Washington have surpassed the New York Tri-State area in inventory for the first time since CBRE began tracking the market in 2016. Tertiary markets like Reno, NV, and Abilene, TX, have development pipelines that could outpace those of primary markets like Hillsboro, OR, or Silicon Valley in 2026.

Planning & Power Challenges

The number of data centers under construction is not expected to reach new highs in 2026. Many projects remain stalled in the planning stage due to permitting, zoning and power procurement challenges.

Power Solutions

Bring your own power (BYOP) and on-site generation are becoming essential in load studies submitted to utilities, especially during peak load periods. Developers are increasingly including hybrid-power strategies to accelerate delivery timelines and reduce grid dependency.

Community Engagement

Community involvement is becoming a key driver in permitting and zoning approvals. In markets like Loudoun County, VA, where data centers will contribute nearly half of local property tax revenue in 2026, public sentiment and workforce impacts are influencing development timelines.

National Incentives

At least 36 U.S. states now offer targeted incentives for data center development, reflecting the growing competition to attract AI infrastructure. These subsidies, including tax exemptions and abatements, are becoming a key factor in site selection as states position themselves for AI-driven growth.

On-Site Power & BYOP Solutions

As grid interconnection delays grow, BYOP and on-site generation (including batteries and gas turbines) are becoming routine in large-scale data center planning.

AI Factories & Fiber Expansion

Improved long-haul fiber and AI-model training demand have unlocked new markets beyond traditional carrier hotels in nearby urban centers. AI factories like the recent hyperscaler deployment in West Des Moines, IA, show how latency constraints are no longer limiting high-density data centers. Gigawatt sites in Ohio, Michigan, Texas and Pennsylvania continue to draw interest from investors and end users seeking significant power quickly.

Hybrid Power Systems

Hybrid power systems that combine batteries and natural gas turbines are reducing reliance on diesel backup generators. These systems limit the number of generators required, improve energy efficiency and enhance system reliability during peak grid stress.

Inference AI

The shift from AI training to AI Inference demand is creating a need for more regional and distributed data centers, not just hyperscale hubs. Inference workloads often need to be near end users, reshaping site strategy and accelerating growth in secondary markets.

Rising Power Consumption

As the power density of data center servers continues to rise, so will the power consumed. Developers and operators will focus on power usage effectiveness (PUE) in 2026 to use power as efficiently as possible.

Ongoing Labor Constraints

Remote development will remain challenging due to a shortage of skilled labor. Mechanics, electricians, plumbers, laborers and construction workers continue to be in demand for greenfield development projects. Attracting these tradespeople from other industries will increase development costs.