AI-Driven Growth Ignites Explosive U.S. Data Center Demand



Uncover the unprecedented surge in data center construction derived from the relentless growth of AI in uncertain economic times. 

Despite prevailing economic uncertainty and concerns surrounding power availability, the demand for data center space continues to soar, leading to an unprecedented surge in construction. Recent research by CBRE reveals that the North American data center market is experiencing an all-time high in construction, largely fueled by the relentless growth of artificial intelligence (AI).


AI-Driven Growth Ignites Explosive U.S. Data Center Demand


According to CBRE's latest North American Data Center Trends Report, there is currently 2,287.6 megawatts (MW) of data center supply under construction in primary markets, marking a new record high. Impressively, over 70% of this supply is already preleased. Comparatively, during the same period last year, the total under construction amounted to 1,830.3 MW. This surge in construction is driven by companies leasing space up to three years in advance of completion, indicating anticipation of future demand and a desire to secure data center space at current pricing.

Despite challenges within the supply chain, the eight primary U.S. data center markets showcased remarkable resilience in the first half of 2023. The total absorption reached 468.8 MW, an impressive figure considering the circumstances. Although supply increased by 19.2% year-over-year, the vacancy rate remains near a record low of 3.3%. Such a robust demand paired with a shortage of available power and prolonged project timelines have resulted in  a continuous ascent in asking rental rates. On average, primary market asking rents rose to $147.80 per kW/month, representing a significant 15.9% year-over-year increase from the previous value of $127.50.

Among the top data center markets in North America, Northern Virginia maintains its position as the most active, with a staggering 918 MW currently under construction. Notably, the market has achieved a record-low vacancy rate of 0.94% and is actively undertaking power improvement projects to meet the escalating demand. Another remarkable market, Chicago, experienced the largest surge in under-construction activity, with a notable increase of 125% compared to other data center markets across the U.S.

The Dallas-Fort Worth market also demonstrated significant growth, witnessing a staggering year-over-year increase in absorption of 327%, soaring from 25.89 MW to 110.6 MW. Meanwhile, Hillsboro experienced the most substantial inventory growth among all primary markets, with a commendable 78% year-over-year increase reaching 248.4 MW from 139.4 MW.

The thriving demand for data centers in North America demonstrates the critical role they play in today's technological landscape. With the continuous advancement of AI and data-driven technologies, businesses and organizations are increasingly relying on secure and robust data center infrastructure. As a result, the construction boom witnessed in the first half of 2023 comes as no surprise. The industry's resilience, even in the face of challenges, reflects the unwavering need for data centers and their indispensable role in powering modern enterprises.

Looking ahead, the expansion and construction of data centers are expected to persist as companies recognize the importance of staying at the forefront of technological innovation. With data center providers taking proactive steps to meet this growing demand, North America is solidifying its position as a global leader in the data center industry.

AI-Driven Growth Ignites Explosive U.S. Data Center Demand

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