North America Data Center Trends H1 2025

• Average asking rates for 250-to-500-kW requirements across primary markets rose by 2.5% in H1 2025, continuing a steady upward trajectory amid resilient demand and constrained infrastructure.
• The most substantial rate acceleration has occurred in the largest deployment tiers where high-density contiguous capacity is increasingly scarce.
• Across North America’s leading data center hubs, requirements of 10 MW+ recorded the sharpest increases in lease rates, driven by hyperscale demand, limited power availability and elevated build costs.
• In Northern Virginia, 10 MW+ deals saw average pricing climb by 13.8% since year-end 2024, as competition intensified for scalable, power-ready sites in the most active development market in the country.
• Silicon Valley had the strongest growth among core markets, with 10 MW+ pricing increasing by 19% amid persistent power constraints and rising demand from AI-infrastructure operators.
• Chicago posted a 15.4% gain in the 10 MW+ tier, reflecting a shortage of large contiguous blocks of space and growing delays in power delivery timelines.
• The pricing gap between smaller and larger deployments continued to widen, as AI and hyperscale workloads drove sustained demand for future-proofed capacity at scale.

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

• North American data center investment volume fell by more than half year-over-year in H1 2025 to less than $1 billion. This slowdown was largely the result of delayed decision-making by investors due to economic uncertainty, geopolitical conflicts and power supply challenges.
• Despite these obstacles, data centers' strong market fundamentals and appeal as an alternative asset continued to attract a broad investor base, including those that normally focus on traditional real estate sectors like net-lease and industrial. Fewer direct investment opportunities in the industrial sector further fueled investor interest in data centers.
• Investment activity is expected to rebound in the second half of 2025, fueled by the closing of delayed deals and new, large-scale investment opportunities. Robust development activity will continue to drive demand for joint-venture equity and forward commitments for new data center builds.

Notable H1 2025 North American Capital Markets Activity

• Issuance of commercial mortgage-backed securities (CMBS) for data centers hit an all-time high of approximately $4.5 billion in Q1 2025, led by Switch’s $2.4 billion deal backed by three Nevada data centers and QTS’s $2.05 billion transaction secured by four assets in Virginia and Georgia.
• The financing market has seen a significant amount of CoreWeave-leased financings. An estimated $7 billion in CoreWeave-leased financings were secured in recent months, largely for build-to-suit construction projects.
• Open AI, Oracle and Softbank announced the Stargate project, which will fund up to $500 billion worth of AI infrastructure.
• Principal raised $3.64 billion for a data center growth and income fund to capitalize more than $8 billion of hyperscale development assets across the U.S. in partnership with Stream Data Centers.
• Blue Owl Capital acquired IPI Partners’ investment management business for approximately $1 billion, adding over $10 billion of digital infrastructure investments to its assets under management.
• DigitalBridge and La Caisee acquired Yondr Group, a global developer, owner and operator of hyperscale data centers.

Figure 4: Under-Construction Totals Y-o-Y % Change for Primary Markets

• Rental rates continued to rise, driven by limited powered land availability and capacity constraints in existing facilities. Rising costs of capital, land values, construction and the impact of tariffs on development budgets further contributed to increased rents, particularly for build-to-suit projects.
• Cap rates remained relatively stable, with robust demand for quality assets outpacing supply. Initial cap rates for Class-A assets typically ranged from 100 to 150 basis points (bps) above the 10-year Treasury yield.
• Sites offering power access within 18 to 36 months are highly sought after, prompting significant investment from owner-users and developers in tertiary markets. Pennsylvania, with its ample power supply and strategic location near the New York Tri-State and Northern Virginia markets, has seen notable activity.
• Both owner-users and developers are increasingly prioritizing access to larger sites with over 200 MW of power.
• Some large cryptocurrency miners are reevaluating their strategies, shifting available power capacity toward data center development.
• Large-scale projects are increasingly incorporating on-site power generation, including gas-fired electric plants, photovoltaic (PV) farms and battery energy storage systems (BESS). Furthermore, deployment of small modular nuclear reactors (SMRs) is expected to occur within the next decade.

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

Fiber to Data Centers

• Lumen secured $8.5 billion in deals with tech giants (Microsoft, Google, AWS, Meta) for AI-focused fiber infrastructure, aiming for 45% AI network utilization by 2027.
• Zayo invested $4 billion in 5,000 miles of fiber for AI/cloud expansion, including new routes and upgrades.
• Arcadian Infracom added over 3,500 route miles of high-capacity fiber on the West Coast.
• ZB8 Infra built a new fiber route in Virgibua between Ashburn, Richmond and Virginia Beach cable landing stations.

Mexico Fiber Connections to U.S.:

• Fermca Networks installed a 2,000-kilometer fiber system connecting El Paso, TX to Queretaro.
• C3ntro Telecom built a 2,500-kilometer fiber route from Queretaro to Phoenix.
• Neutral Network is building a fiber network from Laredo, TX to Queretaro.
• Sierra IG is building metro networks in key Mexican data center markets.

Fiber to Cable Landing Stations:

• Windstream leads the Beach Route Alliance, connecting Northern Virgina to Jacksonville.
• DC Blox is installing high-capacity fiber from Atlanta to Myrtle Beach and Palm Beach cable landing stations (CLSs).
• Lightpath is building a fiber network to Northeast CLSs.
• Fiberlight acquired a 200-mile fiber network to connect Northern Virginia to Virginia Beach CLSs.
• Arcadian Infracom is building a route from Reno, the San Francisco Bay Area and Los Angeles to Eureka Echo/TPU CLSs.

Equipment Upgrades:

• Numerous domestic/international carriers and submarine cable systems are upgrading optical equipment for 800G transport.
• Multiple carriers are investing in 1.6T Dense Wavelength Division Multiplexing testing, driven by AI demands. Ciena's WaveLogic 6 system is being tested by carriers like Verizon, AT&T, EU Networks and Lumen.

Figure 6: Total Inventory vs. Under Construction by Primary Market, H1 2025

Figure 7: Total Inventory vs. Under Construction by Secondary Market, H1 2025

• Utilities are increasingly seeking contributions from developers and occupiers toward capital expenditures (CAPEX) for power generation and transmission infrastructure serving data center sites.
• Data center development is shifting to new markets with faster power access due to limited power availability in established locations.
• The size of land transactions continues to increase, driven by projects demanding 250, 500 or 750+ MW of power. However, the adoption of high-density cooling solutions (immersion, direct-to-chip) could potentially reduce the number of acres required for development in the future as power-per-rack density continues to rise.
• Power availability remains the foremost site selection criterion for greenfield data center developments.
• As power consumption and data center sizes grow, the demand for markets with low power costs will boost supply growth. Such markets include Atlanta, Charlotte-Raleigh, Dallas-Fort Worth, Austin and San Antonio.
• Pricing is expected to remain elevated, comparable to levels last seen in 2011-2012 at $200+ per kW per month. However, we do not expect sustained double-digit year-over-year price increases in coming years.
• The pricing premium for large occupiers requiring 10 to 30 MW of continuous capacity remains a significant challenge. Consequently, we expect a sustained rental rate premium for these large-scale requirements, outpacing the pricing growth for smaller-scale data center needs.
• Momentum toward renewable energy transitions, including on-site solar, wind, geothermal and modular nuclear, will accelerate as operators aim to de-risk power strategies and meet long-term sustainability targets.

Advanced Cooling & Sustainability

The rise of GPU-intensive AI workloads is pushing traditional air cooling to its limits, driving greater adoption of direct-to-chip and immersion liquid cooling. Simultaneously, growing regulatory scrutiny on water usage is compelling operators to explore zero-water or near-zero-water heat rejection systems. When will these advanced cooling strategies become standard design requirements for new data center developments?

Edge Data Centers

Low latency applications from autonomous vehicles to augmented reality and virtual reality require compute resources closer to end users. When will we see meaningful growth in micro and modular edge facilities specifically built to support these workloads?

Behind-the-Meter Power & Energy Resilience

Traditional grid interconnection remains the preferred strategy for most data center developments this year, even as power availability becomes increasingly scarce. When will behind-the-meter solutions such as on-site generation, battery storage and modular power systems advance enough to provide the reliability, resilience and redundancy needed to truly compete with the grid?

Cybersecurity

Cyberattacks remain a significant threat to data center operations across all facility types. When will we see AI-driven threat detection systems achieve widespread adoption and meaningfully reduce these risks?

Regulatory & Geopolitical Pressures

Tariffs, chip supply constraints, geopolitical tensions and evolving sustainability mandates continue to force developers to plan projects years in advance. When might we expect regulatory clarity and improved global trade conditions to ease these challenges?

Supply Chain Constraints

Long lead times for transformers, switchgear, generators and other critical electrical infrastructure remain a major obstacle to data center delivery schedules. When will equipment shortages stabilize and procurement timelines return to historical norms?