An analysis of the data center collocation market published today by JLL, a provider of commercial real estate services, finds that only 2.3% of the more than 15.5 gigawatts of current capacity in North America is currently vacant for a new all-time low.
Additionally, while more than 7.8 GW of data center capacity is under construction, nearly three-quarters of it has already been pre-leased.
Sean Farney, vice president of data center strategy for JLL, said IT leaders will, as a result, need to make some strategic infrastructure decisions in the months ahead by either attempting to lease colocation space long before applications are developed, deploy workloads on cloud services or, if they have the financial resources, build their own data centers.
In many cases, organizations are now committing to leasing data center capacity 18 to 24 months ahead of when it might be needed, according to the JLL report.
Since 2017, the overall data center co-location market has been growing at a 20% compound annual growth rate that is expected to continue to 2030 and beyond, noted Farney. At the same time, co-location facility rents have increased by more than 50% over the last five years and the rate at which data is being created shows no signs of slackening in the age of artificial intelligence (AI), noted Farney.
A total of 42 GW of total data center colocation capacity will be available by 2030, with cloud service providers and providers of managed co-location services collectively expected to provide more than 100 GW of capacity over the next five years as new data centers are brought online, according to JLL.
Unfortunately, cloud providers and technology companies, in addition to building their own data centers, already account for 65% of all data center leasing activity, which considerably narrows the options IT leaders might have. The issue IT leaders will need to navigate is that hosting workloads on cloud services is generally going to be more expensive than it is to rely on providers of co-location services.
On the plus side, in the first half of 2025, an additional 2.2 GW of data center capacity was brought online, but demand driven by the rise of artificial intelligence (AI) continues to far outstrip available supply, said Farney. As a result, the cost of renting data center co-location space continues to increase at rates that are likely to impact the number of application workloads any organization may be able to afford to deploy, he added.
Overall, the region with the most data center capacity remains Northern Virginia, with 5.6 GW of capacity, followed by Dallas-Fort Worth with 1.5 GW. More than half of the additional capacity made available was in these two regions, with Chicago and Austin/San Antonio accounting for most of the rest.
In terms of new data center capacity being constructed, Phoenix, Chicago and Atlanta are seeing the most growth outside Northern Virginia. Other emerging regions include Columbus, OH, Salt Lake City and Denver.
Theoretically, of course, there might be a technological breakthrough that enables applications to process and store data more efficiently, but the odds of such an advancement having a significant impact on the total cost of IT in the next five years simply isn’t all that high.
