U.S.

Research Report

2025 Data Center Marketplace

Balancing Unprecedented Opportunity
with Strategic Risk
 Table Of Contents
Introduction..................................................................................................................................................... 3

Balancing Unprecedented Opportunity with Strategic Risk..................................................................... 4

Industry Overview & Trends ......................................................................................................................... 6

Investment Activity.........................................................................................................................................6
Pricing: Domestic Rental Rates.....................................................................................................................8
Increased Deal Flow & Pricing Discovery ..................................................................................................10
The Emergence of New Markets.................................................................................................................12
Hyperscale Dominance ...............................................................................................................................14
Impact of Artificial Intelligence ...................................................................................................................16
The Relevance of Alternative Energy Sources ..........................................................................................17
Predictions for 2025..................................................................................................................................... 19
Increased Rent .............................................................................................................................................19
Vertical Design & Increased Rack Density.................................................................................................19
Multiple Emerging New Markets................................................................................................................20
New Project Delays ......................................................................................................................................21
Domestic Market Spotlight ......................................................................................................................... 22
Reno the Next Big Data Center Market?....................................................................................................22
Domestic Market Analysis .......................................................................................................................... 24
Atlanta, GA.....................................................................................................................................................24
Chicago, IL......................................................................................................................................................26
Dallas, TX........................................................................................................................................................28
Hillsboro, OR.................................................................................................................................................30
Los Angeles, CA.............................................................................................................................................32
Northern California......................................................................................................................................34
Northern Virginia..........................................................................................................................................36
Phoenix, AZ....................................................................................................................................................38
International Market Analysis..................................................................................................................... 40
India................................................................................................................................................................40
Indonesia.......................................................................................................................................................42
Italy.................................................................................................................................................................44
London, England...........................................................................................................................................46
Madrid, Spain................................................................................................................................................48
Santiago, Chile...............................................................................................................................................50
Toronto, Canada...........................................................................................................................................52

2 2025 Data Center Marketplace Report

Introduction
The data center industry underwent data center power demand is projected to
unprecedented transformation in 2024, driven grow by at least 160% by 2030, primarily driven
by historic absorption rates from hyperscale by AI workloads. Many established markets
operators and the rapid advancement of are already at or near capacity, compelling
artificial intelligence (AI). Vacancy rates across tenants to prioritize power availability and
major markets fell to record lows, intensifying scalability over traditional market preferences.
competition for space and power and requiring Secondary and tertiary markets are drawing
significant investments in land, development, increased interest despite the significant capital
and infrastructure. investments required.

As we compiled this report, the announcement Investors are eager to participate in the sector’s
of China’s disruptive AI model, DeepSeek, growth, but success requires more than available
introduced a new variable with potentially far- capital. Navigating infrastructure demands,
reaching implications for the data center sector, securing power resources, and making timely,
particularly for hyperscale providers. DeepSeek decisive commitments are critical in this high-
represents a significant advancement in natural stakes environment. Time-to-market has become
language processing, with enhanced contextual a key competitive advantage.
understanding, faster model training capabilities,
and improved multilingual proficiency that The coming years will test the industry’s
differentiate it from existing AI models. Notably, adaptability as technological advancements,
these improvements were achieved with greater power constraints, and evolving demand patterns
efficiency and lower costs, challenging previous continue to shape the landscape.
assumptions about the resource intensity
required to develop cutting-edge AI models. This
development underscores how rapidly technology
can evolve and how swiftly competitive
advantages can diminish. The emergence of Data center power
DeepSeek may lead to increased demand for
high-performance computing resources as
demand is projected to
companies seek to remain competitive in the grow by at least 160%
evolving AI landscape. We will continue to monitor
by 2030, primarily
these developments and provide updates in our
midyear report. driven by AI workloads.
–GOLDMAN SACHS
The urgency to secure reliable power sources
and accelerate development timelines is at
an all-time high. According to Goldman Sachs,

U.S. Research Report 3

 Balancing Unprecedented Opportunity
with Strategic Risk
In 2024, the data center industry continued its unprecedented growth, shattering previous
records and positioning itself for continued expansion. North America’s third-party operator
supply grew more than 40%, from 12.4GW in 2023 to over 18GW in 2024 — not including
the additional 30GW of planned capacity1. This growth was driven by the accelerating pace
of digital transformation and the growing adoption of AI across industries, with hyperscalers
like Amazon, Google, Meta, Microsoft, and Oracle leading the demand.

1
Colliers U.S. Research, datacenterHawk

4 2025 Data Center Marketplace Report

 Domestic Third-Party Colocation Supply 2024
12,000

10,000

8,000

6,000

4,000

2,000

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Sources: Colliers U.S. Research, datacenterHawk, Green Street

Overall, power and data center capacity demand data center supply deficit of more than 15GW
continues to outpace supply in key markets, by 2030 — close to the size of today’s third-
driving vacancy rates to historic lows and party market. The rapid growth of AI workloads
pushing pricing to new peaks in primary markets has dramatically amplified power issues, as AI
like Northern Virginia, Northern California, consumes substantially more power per rack
Dallas, and Chicago. New developments are than traditional workloads, putting pressure on
being rapidly pre-leased, with datacenterHawk an already limited infrastructure.
reporting that more than 1.4GW of the 1.5GW
absorbed in Northern Virginia in 2024 was With power availability becoming the primary
pre-leased, pushing the vacancy rate below 1%. limiting factor in traditional markets, new
Across the country, we estimate that at least 70% markets are emerging, often near established
of new product is pre-leased, contributing to a ecosystems that embraces development.
national average vacancy rate of just 2%. Hillsboro and Reno have grown as extensions of
Northern California’s market, while Columbus
However, the industry continues to face and Minneapolis have gained traction due to
significant power challenges. According to their proximity to Chicago.
McKinsey, the United States could experience a

U.S. Research Report 5

 Industry Overview & Trends
Investment Activity: Attractive Sector 2024 reached $57 billion, with an additional $29
with Significant Capital Requirements billion pending — more than double the $26
billion recorded in 2023. Blackstone projects up
As predicted in last year’s report, the data center
to $2 trillion in generative AI investment in the
industry attracted a surge in capital investments
sector over the next five years, with half of that
in 2024, notably shifting towards joint ventures,
spending concentrated in the U.S.
loans/credit facilities and acquisitions. This
shift reflects the growing difficulty in securing
New and unexpected players are also entering
speculative financing and the increasing scale of
the market, drawn by access to existing power
new campuses, which now demand significantly
infrastructure. Core Scientific, for example, is
more capital. A lack of available product has
investing $4 billion to transform its Bitcoin mining
accelerated new development, with larger, more
facilities in Denton, TX, into AI-focused data
complex builds attracting record amounts of
centers. Applied Digital secured $450 million from
capital. Not too long ago 50MW would have been
investors like Macquarie, NVIDIA, and Related
considered a large campus, but now 100MW-
Companies to upgrade equipment and build one
plus campuses are common. With construction
of the world’s largest data centers, prioritizing
costs averaging $11 million per MW2, a campus
High-Performance Computing (HPC) application.
can now require a billion-dollar investment —
a daunting prospect for developers building Investors continue to look for unique ways to
multiple sites simultaneously. gain exposure to the sector. HMC Capital recently
announced a new ASX-listed Digital Infrastructure
This massive capital requirement has prompted
REIT with an enterprise value of $4.3 billion,
major real estate investors and private equity
encompassing assets in Australia and the United
(PE) firms to join forces with operators,
States. This dynamic evolution of funding models
hyperscalers, and other strategic technology
and participants signals the data center industry’s
companies to capitalize on the industry’s growth
resilience and its strategic importance in the AI-
potential. Per Tech Capital, PE’s share of deal
driven future. The following is a detailed chart of
values has increased from 54% to 80%–90% over
more traditional partnerships.
the past five years.

As new players seek to capitalize on surging

AI demand, more diverse funding models are
anticipated. Success will be determined by how
effectively operators leverage partnerships
to balance the need for massive scale with
innovative financing. According to Synergy
Research Group, data center deals closed in

2
Green Street Data Center Annual Sector Outlook 2025

6 2025 Data Center Marketplace Report

U.S. Domestic Partnerships In Data Centers 2024

Acquisition Financing & Credit Joint Venture

COMPANIES Blue Owl DigitalBridge Cerberus Aligned Data DataBank & 14 Vantage Blue Owl, Equinix and
& IPI & Yondr Capital Centers & Leading Digital & Wells Fargo Chirisa GIC to Expand
Management Blackstone Infrastructure Technology xScale
& Prime Credit Banks Including Parks and
Data Center TD Securities PowerHouse
Data Centers

FUNDING $1B Confidential $200M $600M $725M $3B $5B $15B

PARTNERSHIP Blue Owl’s DigitalBridge’s Prime secured Blackstone Flexible Vantage This JV aims This JV is
acquisition acquisition of credit facility provided an financing secured a $3 to address the intended to
of IPI: This Yondr: This to finance the initial $600 vehicles billion green demand for accelerate
acquisition aims strategic move acquisition of million senior will allow a loan from Wells data center the Equinix
to enhance Blue aims to bolster data center secured credit company to Fargo and joint capacity driven xScale data
Owl's digital DigitalBridge's assets in facility to accelerate bookrunners TD by AI advance- center portfolio
infrastructure position in the top-tier U.S. support the construction Securities, Truist ments. Focus & expand
strategy by data center markets. This development projects to meet Securities, Inc. on building out hyperscale data
integrating IPI's market by funding will of Aligned’s surging demand and Scotiabank to support GPU centers in the
portfolio of 82 leveraging support Prime's newest and for data center to fund the cloud firm & U.S by 1.5GW.
data centers Yondr's expansion largest data capacity driven ongoing deploy capital
and accelerating expertise in strategy, center in West by AI workloads. development for turnkey
future growth. delivering with equity Jordan, Utah. of its North build-to-suit AI/
scalable contributions American data HPC data center
solutions. from investors. center platform developments.
totaling nearly
1.4GW of IT
capacity.

Source: Colliers U.S. Research

“The number of institutional lenders that are newly interested

in financing data centers has grown significantly, driven by the
attractive supply and demand fundamentals and a desire to
rebalance asset-class exposure in their portfolios. This recent surge
in demand and a welcomed shift in monetary policy will allow the
strong market momentum for debt capital to continue in 2025.”

Dylan Kane
Managing Director, Colliers

U.S. Research Report 7

 Pricing: Domestic Rental Rates

In 2024, U.S. data center lease rates saw For larger deployments, wholesale and
less variation across deployment types and hyperscale capacity pricing has converged due
geographic markets but experienced significant to supply constraints and expected returns
increases from historical benchmarks. Retail for new builds. Wholesale and hyperscale
colocation rates for deployments under 500kW, deployments (more than 500kW) previously
which averaged less than $200/kW, including ranged from $85–$110/kW, net of electrical, and
electrical, per month before the pandemic, now stand at $150–$200/kW in primary markets
surged to more than $250/kW, with rates as and $125–$160/kW in secondary locations. The
high as $300–$400/kW in markets like Northern rising cost of capital, combined with a majority
California. Average domestic pricing has of absorption occurring in new builds, has driven
increased by at least 20%. these increases.

Wholesale/Hyperscale (>500kW)
$250
$200
$150
$100
$50
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Low ($/kW) High ($/kW)

Note: Net of electric
Sources: Colliers U.S. Research, Green Street

Retail (<500kW)
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Note: Includes electric
Sources: Colliers U.S. Research, Green Street

8 2025 Data Center Marketplace Report

Looking ahead, rates across all deployment types scarcity of available capacity has shifted the
are projected to remain stable and, in some pricing power from tenants to operators/
instances, rise further due to power shortages, landlords. Digital Realty’s recent earnings reports
rising energy costs, increased infrastructure revealed rental rate renewals increasing around
expenses, supply chain challenges, and record 5%-15%.
low vacancy rates driven by AI demand. The

“As of September, Digital Realty’s record $8 billion

development pipeline was 74% pre-leased, demonstrating
the robust demand for data center capacity. This
acceleration, coupled with rising supply constraints,
has continued to drive Digital Realty to execute on our
strategic priorities to support our customers’ growing
capacity requirements.”

Andy Powers
CEO, Digital Realty

This upward trend is most

pronounced in power-
constrained markets, where
rates are expected to increase
substantially. By the end
of 2025, we may see most
wholesale/hyperscale rates
approach or exceed $200/kW
due to the persistent supply-
demand imbalance.

U.S. Research Report 9

 Increased Deal Flow & Pricing Discovery This capital is spread across private high-net-
worth vehicles like non-traded BREITs and
In 2024, the Federal Reserve implemented publicly traded SREITs, as well as institutional
three rate cuts in September, November, and funds grappling with pricing spreads and capital
December, lowering the target federal funds rate costs. With investors prioritizing rent growth,
range to 4.25%–4.50%. According to Chatham data centers are emerging as a key focus for
Financial, forward Treasury curves are projected 2025. MSCI reports that total sales volume in
to decline slightly throughout 2025, with a 2024 reached $420.4 billion, a 9% increase from
median forecast of 3.875%. Many institutional 2023, a trend expected to continue as capital
investors had adopted a wait-and-see approach shifts from other asset classes into data centers.
in anticipation of more significant cuts, but the
reductions were less aggressive than many had The evolution of the capital stack has been
hoped. While the marginal decrease in short- equally noteworthy. In 2024, global investment
term debt costs will improve projected returns, it managers launched data center-focused REITs,
won’t be enough to bridge the bid-ask spread for including one that closed the year’s largest
many deals. single-asset sale — a Chicago facility sold
for $439 million in November. According to
Across the broader commercial real estate PitchBook, PE activity also surged, with firms
landscape, uncertainty lingers. The future of the like Blackstone, Brookfield, DigitalBridge, and
office sector remains unclear, and industrial’s Macquarie investing heavily in data centers. This
bullish run in rental growth is moderating. momentum is expected to continue into 2025,
Persistent inflation has kept nearly $400 billion as investors remain drawn to the sector’s growth
in dry powder globally on the sidelines — double potential.
the amount held after the global financial crisis.

10 2025 Data Center Marketplace Report

Lenders have also ramped up activity, attracted Centers with a $200 million credit facility for U.S.
by the sector’s strong fundamentals and growing market expansions. Meanwhile, a Wells Fargo-
demand. New and established lenders alike led syndicate provided a $3 billion revolving
have increased liquidity for pre-development, credit facility to Vantage Data Centers in April,
construction, and permanent financing, supporting its North American expansion.
particularly for hyperscale projects that often
require nine-figure investments. Top-tier These high-profile deals reflect the data center
developers are securing favorable loan terms sector’s growing appeal to mainstream lenders,
thanks to their “all-world” credit ratings and the who increasingly view it as a resilient and
persistent supply-demand imbalance. scalable investment opportunity amid broader
real estate uncertainty. As power and AI-driven
Recent transactions underscore this dynamic. demand continue to reshape the industry,
In December 2024, Serverfarm secured $747 capital is expected to follow suit, fueling further
million to support a 500MW expansion of its growth in the years ahead.
Houston campus, targeting AI-driven demand
from hyperscalers. In September, Cerberus
Capital Management provided Prime Data

U.S. Research Report 11

 The Emergence of New Markets

The shift towards sites near established primary Reno has also solidified its position as an
markets has significantly impacted the industry, alternative to Northern California, leveraging the
driven by power limitations, availability of Tahoe Reno Industrial Center, a 100,000-acre-
real estate, and cost factors. These secondary plus industrial park. In the past 12 months, Reno
markets are no longer seen as overflow locations added more than 400MW of capacity, with more
but as strategic hubs with power capacity their than 2GW planned over the next three years.
primary market counterparts can’t match. If completed, this expansion would put Reno
Enhanced fiber connectivity, low power costs, among the top 10 domestic markets by total
streamlined entitlements, and tax incentives supply.
have made these areas increasingly attractive for
hyperscale and colocation facilities. Meanwhile, the Midwest is seeing similar
growth, with Indiana and Minnesota becoming
In Vernon, just southeast of Los Angeles, attractive alternatives to the power-constrained
developers have found a viable alternative to Chicago market. These areas offer abundant
the power-constrained Los Angeles market. The land, renewable energy options, and proximity
area’s available low-cost power and favorable to established ecosystems. Early investor
zoning have attracted Prime Data Centers, success has validated these markets’ potential,
CoreSite, and Goodman to buy land for data center encouraging further development as the
developments. Vernon’s current and planned industry continues its search for reliable power
capacity will increase Los Angeles’s market size by and scalable infrastructure.
more than 100MW, or approximately one-third of
its existing supply — a substantial addition to the
region’s limited power supply.

12 2025 Data Center Marketplace Report

 Key U.S. Data Center Markets

Hillsboro, OR

Minneapolis, MN

Boston, MA

Northern Tri-State (Connecticut,

Chicago, IL
California Reno, NV New York, Northern NJ)
Salt Lake City, UT Columbus, OH
Denver, CO Northern Virginia

Los Angeles, CA

Phoenix, AZ
Atlanta, GA
Dallas, TX

Primary Market Austin/San Antonio, TX

Houston, TX
Secondary Market
Emerging Market

Primary Markets
Market Market Size (MW) Absorption (MW) Vacancy Rate
Atlanta, GA 2,010 898 0.63%
Chicago, IL 1,100 450 1.03%
Dallas, TX 1,600 172 1.77%
Phoenix, AZ 2,050 507 1.29%
Northern California 810 794 3.41%
Northern Virginia 5,350 925 0.26%

Secondary Markets
Market Market Size (MW) Absorption (MW) Vacancy Rate
Austin/San Antonio, TX 750 440 2.80%
Boston, MA 90 1 12.00%
Denver, CO 130 11 22.00%
Hillsboro, OR 575 34 0.48%
Houston, TX 210 5 6.80%
Los Angeles, CA 230 17 5.06%
Salt Lake City, UT 360 9 0.30%
Tri-State (Connecticut, New York, Northern NJ) 510 46 3.80%

Emerging Markets
Market Market Size (MW) Absorption (MW) Vacancy Rate
Columbus, OH 510 425 1.00%
Reno, NV 544 316 0.60%

Source: Colliers U.S. Research, datacenterHawk

U.S. Research Report 13

 Hyperscale Dominance

In 2024, hyperscalers dominated the

U.S. data center landscape. These
companies leverage their massive size,
technological sophistication, operational
efficiency, strong credit profiles, and
global reach to maintain a competitive
edge. Beyond constructing new facilities,
they are leasing existing data centers to
meet growing demand. Their massive
buying power has turned the third-party
colocation business into a race to secure
space in their preferred markets. The
chart below demonstrates this control.

Hyperscale CapEx 2025 (Estimation in Billions)

$0 $50 $100 $150 $200 $250 $300 $350

Amazon Google Meta Microsoft

Source: Morgan Stanley

14 2025 Data Center Marketplace Report

Hyperscalers’ site selection decisions are players have entered into strategic renewable
reshaping the geography of data center hubs, energy agreements, highlighted by Microsoft’s
driving growth in previously overlooked areas partnership with Brookfield to develop over
that offer developable land, power, and speed- 10.5GW of renewable energy capacity by 2030
to-market. In 2024, hyperscalers accounted — the largest corporate clean-energy purchase
for 80% of total data center demand and to date and almost eight times the size of
occupied nearly half of the global capacity. Their the largest single corporate power purchase
expansion influences the entire technology agreement (PPA). This shift toward alternative
ecosystem, from equipment manufacturers to energy resources will be essential as data
utility providers to local economies. With limited centers seek unique power and energy solutions
power availability, hyperscalers are open to to meet their growing demand.
building facilities with 100MW or more wherever
sufficient power and infrastructure exists, With unmatched buying power and a relentless
often incentivized by tax breaks and access to drive for innovation, hyperscalers will remain at
renewable resources. the forefront of the data center industry, shaping
its future trajectory and driving advancements
Renewable energy has become a critical factor in across the broader technology landscape.
site selection as hyperscalers evaluate long-term
sustainability and power availability. All major

U.S. Research Report 15

 Impact of Artificial Intelligence Goldman Sachs projects more than $1
trillion in capital spending over the next few
AI is driving an extraordinary surge in demand years on AI-related infrastructure, including
for high-density, high-powered infrastructure, data centers, semiconductors, and network
as its workloads require significantly more upgrades. Hyperscalers are no longer expanding
computing power than traditional deployments. incrementally; they are scaling to an entirely
This shift is influencing every stage of the data new level. The traditional development model
center process, from site selection to design has evolved into the construction of larger
innovation. Blackstone sees the intersection of campuses designed to meet AI’s immense power
digital infrastructure and the need for power as needs. They require more power (kW) per rack,
one of the most exciting and critical investment with innovations like liquid cooling, advanced
themes of our time. Blackstone also reported power distribution systems, and AI-driven energy
a 100-fold increase in data usage over the optimization to maintain efficiency at scale.
past 15 years, with more data created in the
past three years than in all of history.3 As AI This shift is already visible in large-scale projects
adoption accelerates, this trajectory is expected across the country. For example, Meta plans to
to continue. construct a data center in Louisiana with more
than 2GW of capacity. In Nevada, the Tahoe
Reno Industrial Center has grown into a major AI
infrastructure hub with nearly 1GW of available
power. Meanwhile, Tract is developing a 1.8GW
data center park in Arizona, with up to 20 million
square feet of space across 40 facilities. These
developments illustrate how AI is driving record
levels of investment, power consumption, and
infrastructure expansion. Microsoft’s long-term
lease commitments for its AI expansion have
crossed $100 billion.4

No discussion of AI’s influence on the data

center industry would be complete without
mentioning NVIDIA. In 2024, NVIDIA’s market
valuation skyrocketed past $3 trillion, thanks to
its dominance in producing data center chips. The
company’s midyear Enterprise AI Survey reported
a 42% increase in global usage of NVIDIA GPU-
powered systems, which now support more than
45,000 enterprise AI projects worldwide.

3
Klimczak, S (2024, October 31). The Convergence of Data Centers and Power: A Generational Investment Opportunity. Blackstone.
https://www.blackstone.com/insights/article/the-convergence-of-data-centers-and-power-a-generational-investment-opportunity/
4
Minevich, M (2024, October 28). AI Data Centers and the New Era of Unprecedented Demand. Forbes.
https://www.forbes.com/sites/markminevich/2024/10/28/ai-data-centers-and-the-new-era-of-unprecedented-demand/

16 2025 Data Center Marketplace Report

The Relevance of Alternative Energy
Sources

Data center investors and operators are turning connect to the grid by 2027. Apple is developing
to renewable energy sources like solar, wind, and solar projects across Michigan to bring 132MW of
hydro to address growing power shortages and clean energy online later this year.
strained infrastructure. As with many industry
trends, hyperscalers are leading the charge, Small Modular Reactors (SMRs) are also
driven by rising power demands, declining emerging as a promising solution for the data
renewable costs, and the need for long-term center industry. These reactors produce about
energy resilience. one-third the power of traditional nuclear
plants while offering greater flexibility, reduced
Solar power has become increasingly viable with costs and improved safety. Tech giants are
advances in photovoltaic efficiency and declining actively investing in SMR technology. Google
deployment costs. In response, Meta and Apple has partnered with Kairos Power, while Amazon
have expanded their investments in solar farms, is collaborating with X-energy for projects in
integrating energy storage solutions to maintain Washington and Virginia. The U.S. Department
reliable power delivery. Meta has committed to of Energy has committed $900 million to support
almost 1GW of solar power across Ohio, Texas, SMR deployment.
New Mexico, and Arkansas, which is scheduled to

U.S. Research Report 17

 “Behind-the-meter” initiatives are gaining long-term goals. However, balancing these
traction as the industry seeks direct access to environmental objectives with the industry’s
fast and reliable power sources. Amazon Web rapid growth remains a significant challenge,
Services recently acquired Talen Energy’s 960MW particularly as power infrastructure struggles to
Cumulus campus in Pennsylvania, which draws keep pace.
power from the adjacent 2.5GW Susquehanna
Steam Electric Station. Similarly, Microsoft A prime illustration of this balance is the joint
secured a 20-year PPA with Constellation Energy venture between Crusoe Energy and asset
to source 837MW from Pennsylvania’s Three Mile manager Blue Owl, which has earmarked $3.4
Island nuclear plant. Meanwhile, Meta has asked billion for sustainable digital infrastructure.
developers to identify upwards of 1.4GW of new Crusoe is developing a 200MW data center
nuclear capacity for long- term power needs. at the Lancium Clean Campus near Abilene,
Texas, with plans to expand to1.2GW to support
Sustainability remains a critical priority, AI workloads. As renewable energy adoption
especially with hyperscalers setting aggressive accelerates, the industry’s ability to integrate
environmental targets. In response, the industry nuclear, solar, and behind-the-meter strategies
has intensified efforts to use renewable energy will be key to its long-term success.
sources to reduce carbon emissions and reach

18 2025 Data Center Marketplace Report

Predictions for 2025
Increased Rent

The data center industry faced tight market

conditions in 2024, with demand outstripping
supply in prime locations. McKinsey reported
that colocation prices for available capacity in
the U.S. rose by an 35% from 2020 to 2024 — a
trend expected to intensify in 2025 as vacancy
rates decline further across primary and
secondary markets.

The scarcity of available space and power will

give operators significant leverage, allowing
them to raise rents as long as construction
costs and capital remain constant. In response,
tenants will try to maximize the value of their
existing and new-build footprints, driving
innovation in design and operational efficiency.

Rising rents may also push hyperscalers to explore

more cost-effective energy alternatives beyond
traditionally high-priced data center locations.

Vertical Design & Increased Rack

Density
configurations. According to McKinsey, average
Next-generation AI deployments require higher
power densities have more than doubled over
rack density and advanced design, forcing data
the past two years, rising from 8kW to 17kW per
centers to rethink traditional designs. While
rack, with projections reaching as high as 30kW
horizontal expansion requires new land, site
by 2027.
development, and infrastructure extension,
vertical density optimization leverages existing These improvements deliver 40%–60% more
infrastructure — including shell structures, power computing capacity from the same footprint. The
feeds, and cooling systems — to increase capacity trend toward even higher densities continues, with
more efficiently. some next-generation designs targeting 100kW-
plus per rack through advanced cooling solutions
Land constraints and rising efficiency demands
and high-density computing architectures. Vertical
are accelerating this shift. Data centers are
scaling enhances capital efficiency and improves
moving the traditional 10–15kW per rack to
power usage effectiveness by optimizing for high-
15–30kW or higher in modern, high-performance
density operations.

U.S. Research Report 19

 Multiple Emerging New Markets West of Dallas, data center development is
surging due to readily available power that can
Citi Research estimates that the data center be accessed more quickly than in other primary
market will grow at a 17% annual rate, markets. With more than 6GW of planned
increasing from 33GW in 2023 to 100GW by capacity, Dallas is expanding into previously
2030. As established hubs like Northern overlooked areas with abundant land and
Virginia and Northern California approach favorable tax incentives. This growth trajectory is
saturation in 2025, the industry’s insatiable positioning Dallas to become the second-largest
appetite for power is driving innovation in U.S. data center market.
sourcing power. The success of Vernon’s
independent power grid in 2024 has inspired This geographic diversification could reshape
similar initiatives in emerging markets across the industry by creating new tech hubs, altering
Northern Indiana, Idaho, Arkansas, and the talent landscape, and fostering innovation in
Kansas. For instance, a 945-acre hyperscale previously overlooked regions. However, success
development in Cheyenne could attract further will depend on developing infrastructure and
activity into the region. cultivating a skilled workforce.

“While the relevancy of primary

markets will not diminish, the
lack of near-term power in
large tranches is forcing both
users and operator/investors to
consider nearby markets that
offer the ability to deliver speed
and scale, especially if that can
be combined with lower power
costs and incentives, resulting
in an improved total cost of
ownership for the end user.”

Dana Adams
President, Vantage North America

20 2025 Data Center Marketplace Report

New Project Delays

Power delivery construction delays have become selection teams must ensure that sites have
a critical challenge for data center projects. In both entitlements and reliable power before
2024, half of all developments had setbacks committing to development.
from power delivery issues and ongoing
supply chain disruptions. While modest supply The industry also faces a worsening labor
chain improvement is expected in 2025, the shortage. According to the Uptime Institute, half of
situation remains critical, especially for essential all data center operators struggle to find qualified
components like substations, transformers, candidates — a figure projected to rise by 75% in
switches, and generators — many of which 2025. This talent scarcity is particularly acute in
can take several years to arrive. Construction specialized fields such as facilities’ engineering,
Dive quotes electrical substation delivery electrical engineering, AI, cybersecurity, and
times ranging from one to four years, adding cloud infrastructure — crucial for the continued
uncertainty to project timelines. evolution and security of data centers.

Compounding these delays, entitlement Project delays due to entitlements, power, and
processes have become lengthier and supply chain will continue to extend project
more expensive as communities demand timelines, slowing industry growth. In some
greater involvement. Requirements include cases, the delays are so severe that companies
environmental studies, public consultations, have had to abandon promising sites — as seen
and infrastructure commitments, especially in with CyrusOne in Santa Clara. The ripple effects
markets such as Northern California, Chicago, of these setbacks are profound, challenging the
Ashburn, and throughout Oregon. Therefore, industry’s ability to scale and meet the surging
early engagement with stakeholders and demand for data center capacity.
proactive project design are essential. Site

U.S. Research Report 21

 DOME STIC MA R K ET SPO TL I G HT

Reno the Next Big Data Center Market?

Raul Saavedra, Head of Colliers’ Data data centers under 50MW, and there was a
Center Advisory offers his viewpoint. general belief that no users would pursue third-
party leasing in Reno. Clearly, that has changed.
Ten years ago, as an Asset Manager for a leading
When I visited Reno before COVID, Switch was
data center REIT, we discussed a potential
the only third-party operator in the market. Now,
speculative development at the Tahoe-Reno
several third-party operators (see map below)
Industrial Center (TRIC) in an Investment
have committed to the Reno data center market
Committee meeting. Reno wasn’t a focus for data
and announced new projects, including Switch.
center development, and the team had limited
knowledge of the area. Key questions included:
Where is Sparks, Nevada? Is the area still reliant on
coal power? Would fiber connectivity be a challenge? Estimated Planned Capactiy
How accessible is it? The consensus was that Colovore: 20MW Switch: 650MW
success would require a large-scale approach to
EdgeCore: 216MW Tract: 4,755MW
lead the market and spread costs across a campus.
We ultimately chose not to invest. NOVVA: 60MW Vantage: 224MW
PowerHouse: 300MW
This discussion was especially noteworthy
Source: Colliers U.S. Research
because, at that time, we primarily focused on
Cold Springs
POWERHOUSE
Tahoe-Reno Industrial Center 600 Britain Dr VANTAGE
Sparks, NV 3451-3483 Clark Station Rd
Sparks, NV
395 APPLE
21505 Reno Tech Pkwy W
Sun Valley
CALIFORNIA

Sparks, NV
NEVADA

TESLA
Sparks 100 Electrical Ave
Sparks, NV
Reno
80 GOOGLE
80 TRACT
2200 Peru Dr 7400 USA Pkwy
Sparks, NV Sparks, NV
Reno-Tahoe
SWITCH
International
1 Superloop Cir
Airport NOVVA Sparks, NV
3399 Peru Dr
Sparks, NV
Tahoe-Reno
Industrial Center
EDGECORE
3000 USA Pkwy
580 McCarren, NV

3 miles

22 2025 Data Center Marketplace Report

“We continue to have a high commitment to the major western cities,
and Reno is no exception. Clients continue to request more inventory
in the Reno area, and our first facility is nearly at a fully reserved and
leased capacity. NOVVA intends to add more sites in the equidistant area
over the next decade.”
Wes Swenson
CEO of NOVVA Data Centers

With all these projects coming online, the market

“Reno is emerging as a strong
will have more than 6,000MW of supply — nearly
10x growth from today’s figures. Reno’s total data center market in response to
development will surpass that of established Northern California’s high costs,
markets like Northern California and Hillsboro,
power constraints, and regulatory
solidifying its position as a major data center hub.
This potential growth, along with the enthusiasm
challenges, which drive demand
from operators and investors, prompted me to for alternatives. Nevada’s
revisit Reno. business-friendly environment,
While I refer to the Reno data center market, tax incentives, low latency, and
it’s specifically Sparks, and more precisely, significant power infrastructure
TRIC. Driving from the Bay Area, I could see the
investments in Northern Nevada
landscape shift as I crossed the Sierras. Reno
itself has a population of about 275,000 and provide the ingredients needed
limited development outside the city. Sparks is for data center growth.”
even smaller, but there’s significant construction
Michael Hochanadel
happening along Highway 80.
Managing Director of Harrison Street
As I surveyed the area, it became evident that
development is concentrated within TRIC, as
shown on the map. Reno’s growing market shares Despite the strong momentum, there have
many characteristics with other emerging markets. been reports of power delivery delays, as
It is strategically located near a major market seen in other data center markets. This is not
(Northern California), offering available land, low unexpected given the rapid growth. We will
barriers to entry for entitlements, reliable power, continue to closely monitor developments in this
competitive utility pricing, incentives, and strong market throughout 2025.
connectivity. This assessment is further reinforced
by Michael Hochanadel, Managing Director of
Harrison Street, who partners with PowerHouse:

U.S. Research Report 23

 D O ME ST IC MA RKET AN AL Y S I S

Atlanta, GA
Atlanta has become one of the most attractive billion data center campus in Union City with
U.S. markets for operators and hyperscalers a total power capacity of 324MW. Colocation
thanks to its rapid time to market, favorable operators have started expanding footprints
tax incentives, and low power costs compared to other areas outside of downtown, including
to other primary data center markets. Its close Alpharetta, Douglasville, and Suwanee. Some of
proximity to the thriving Northern Virginia market these operators include Equinix, Digital Realty,
has sparked a rapid expansion, with capacity DataBank, Flexential and QTS, and others plan to
growing from under 200MW in 2019 to over 2GW enter the market in coming years.
in 2024. The city’s location also offers access to
subsea cables that connect to European and As cloud computing, AI applications, and
South American markets, making it a key data colocation services continue to grow, Atlanta is
market with strong fiber connectivity. cementing its position as a rising data center
powerhouse with long-term growth potential.
Atlanta’s business environment is thriving: the This is magnified by the market’s planned
city has added over 20,000 IT jobs in the last capacity, which is set to double its size.
ten years, according to the Bureau of Labor
Statistics, and over 15 Fortune 500 companies
are headquartered downtown. Hyperscalers
like Microsoft have invested significantly in data
center infrastructure in Atlanta, including a $1.8

24 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$110 - $160 $185 - $315 927% 60%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Time to Market - Power Advantage Infrastructure Concerns
Multiple power providers, tax incentives, and Limited substation capacity in submarkets
low power costs reduce barriers to entry. like Alpharetta and downtown Atlanta
require expensive infrastructure upgrades.
Strong Business Environment
Home to 15+ Fortune 500 headquarters, Competitive Markets
with growing investment from operators The competitive dynamics in the Southeast
and hyperscalers. are evolving as the Carolinas expand their
data center capabilities, potentially offering
Strategic Location more availability.
Close to Northern Virginia, the leading data
center market, but with lower land and New Construction Hurdles
power costs than the Northeast. A 20% rise in construction costs since 2021
and a competitive skilled labor market
pose challenges for increasing numbers of
new builds.

U.S. Research Report 25

 Chicago, IL
Chicago, the third-largest city in the U.S., has Major players CoreSite, Equinix and Digital Realty
long served as a major financial and commercial take up a large percentage of the downtown
hub in the Midwest. These factors have led to footprint. The ability to bring power online
it being a long standing top-five data center has led to submarkets such as Franklin Park,
market, centered around carrier hotel 350 E. Elk Grove Village and Aurora. A tax abatement
Cermack, bought by Digital Realty in the ’90s. program that provides incentives on data center-
related development is driving expansion in
In 2024, Chicago’s colocation data center these submarkets.
inventory surpassed the 1GW mark after a
remarkable 63% growth in commissioned
capacity, reaching a total market size of 1.29GW.
The vacancy rate has steadily declined since Q1
2019, to 3.42% now, well below the five-year
average of just over 7.5%. In tandem with the
tightening in market dynamics, retail pricing has
steadily risen, matching its previous historical
high of nearly $400/kW for deployments of less
than 500kW. This is likely to persist in 2025, as
limited new construction in the pipeline is not
preleased or controlled by hyperscalers.

26 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$130 - $175 $250 - $375 355% 35%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Consistent Growth Infrastructure Constraint
Home to 30 Fortune 500 companies, Like other primary markets, Chicago suffers
Chicago’s strong legacy and fiber from power delivery delays and aging
infrastructure have established it as the power infrastructure.
Midwest’s connectivity hub, driving steady
demand. Nearby Competitive Markets
Other Midwestern markets in Wisconsin,
Tax Incentives Minnesota and Iowa have attracted rising
Chicago offers data center-friendly tax development because of available power,
incentives, with specific laws on data center abundant land, favorable incentives, and
equipment passed in 2019. lower power costs.
Climate & Natural Resources
Site Selection
The region’s cold climate and abundant
Limited buildable land, power shortages,
fresh water support efficient cooling for AI
and increased competition have made the
workloads, while the risk of natural disasters
entitlement process more complex and
remains low.
time-consuming.

U.S. Research Report 27

 Dallas, TX
The Dallas data center market, while always in the Dallas not only benefits from an extensive
top ten, could potentially grow to the second-largest pipeline of projects but also boasts a robust
U.S. market if all of its planned capacity comes online. business environment and a skilled labor force,
The market benefits from its central location, strong enabling the rapid construction of centers.
fiber connectivity, reliable power grid, and business- Power availability through Oncor, and other
friendly environment, with significant tax incentives providers and relatively low natural disaster
for data center investments. risk continue to drive demand. Though the
market faces growing challenges around power
Major data center operators including Compass, Digital infrastructure and rising land costs in prime
Realty, Equinix, CyrusOne, and QTS have established development areas, Dallas is still a top-tier
significant footprints across key submarkets like data center market, with continued absorption
Richardson, Plano, and Fort Worth. Digital Realty of inventory and new construction pipelines.
received large incentives from Garland County for a Though the market faces increasing challenges
60-acre site with plans for a total investment of more related to power infrastructure and rising land
than $1 billion. The market has also attracted strong costs in key development areas, these pressures
growth in areas like Red Oak, where, among other stem from the substantial expansion planned
new development sites, DataBank announced a in the coming years. Dallas is projected to add
480MW campus. Investors continue expanding to new approximately 2GW by 2027, positioning it as
submarkets, particularly in West Texas. For example, a top-three data center market, with strong
for Project Ludicrous, a venture between OpenAI, inventory absorption and ongoing development
Oracle, and SoftBank in Abilene, partners are investing pipelines.
$1.1 billion to build more than 350MW.

28 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$135 - $170 $200 - $315 712% 52%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Escalated Investor Interest Climate Risks
The market has drawn special interest The Dallas climate has been unpredictable
recently with large-scale power projects, in recent years, including times of extreme
including sustainable options. heat and snowstorms. Data centers must
be equipped for a variety of extreme
Incentives weather patterns and prepared to maintain
Texas has no income tax and has exempted AI cooling requirements in the summer.
data center hardware and software from
taxation since 2013, spurring job creation Lack of Power
and investment. While Oncor is operating at high levels now
and still allocating power, this peak power
Reliable Infrastructure & Low-Cost Power demand is going to come with obstacles.
The market is active in assisting data Power will become scarce quickly, leading
center developments and is committed to to infrastructure concerns.
future growth. Power cost is approximately
Rising Land Cost
$.06/kW, low compared to cost in nearby
Increased demand for powered land in
markets.
Dallas and surrounding submarkets is
driving up prices as developers rush to
secure available capacity.

U.S. Research Report 29

 Hillsboro, OR
Hillsboro is now a top ten data center market Another primary attraction for operators is
with more than 550MW of supply in 2024 — set Hillsboro’s competitive power costs, with rates
to double if planned capacity comes online. It has averaging $0.10 per kWh, significantly less than
become a key alternative to Northern California, those in other primary data center markets. This
attracting major players such as NVIDIA, Meta, X pricing advantage, coupled with attractive clean
and ByteDance. with its compelling combination power and tax incentives, has been instrumental
of clean power at an affordable cost. Providers in in drawing and retaining major technology
this market include Digital Realty, EdgeConnex, companies and data center providers to Hillsboro.
Flexential, QTS and Aligned. Balancing rapid growth with sustainable practices
and community interests will also be key to
Hillsboro quickly transitioned from a market with ensuring the long-term viability and success of
less than 100MW and over 20% vacancy in 2019 Hillsboro’s data center industry.
to a market with more than 550MW and less than
1% of product available today. Provider Portland
General Electric (PGE) has been able to source
various types of power with an emphasis on
renewables, specifically hydroelectric, which has
drawn attention to the market over time. In 2020,
Hillsboro implemented the In-Pipe Hydroelectric
Project, which uses the existing water pipeline
system to generate renewable energy.

30 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$135 - $170 $200 - $300 260% 29%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 200 400 600 800 1,000 1,200
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Green Power Lack of Power
Stemming from hydroelectric initiatives, Hillsboro’s strained power supply is a
renewable energy usage reached an growing concern, shifting momentum away
impressive 80% for data centers. from the market.

Affordable Cost & Incentives Entitlement Challenges

There is no sales tax in Hillsboro, and an Green initiatives have led to government
especially low data center tax. resistance against expanding data centers
outside already zoned land.
Strategic Location
Hillsboro is adjacent to major technology Size of Market
hubs like Northern California and Seattle. The city of Hillsboro is limited by acreage
compared to other spillover markets.
Strong Connectivity
The market’s fiber infrastructure and
subsea cables to Asia give the market a
competitive advantage.

U.S. Research Report 31

 Los Angeles, CA
Despite being America’s second-largest city, Los previously impossible large-scale deployments.
Angeles has historically taken a back seat to Its transformation is evident in the 2024
neighboring data center markets due to costs. approvals of 100MW-plus of combined capacity
Established players like CoreSite, Digital Realty, from Prime Data Centers, CoreSite, and
and Equinix have concentrated operations in Goodman, a dramatic shift for a Los Angeles
downtown Los Angeles and El Segundo. The data center market that traditionally absorbs
market has grown modestly but steadily, with less than primary markets annually. If all three
annual gross absorption of 4–5MW, primarily of these planned developments come on line,
driven by colocation requirements ranging from market share would increase by 30%. This
50–250kW. There is also a draw to the market surge in development, coupled with downtown
from carrier hotel, One Wilshire, which provides Los Angeles’s robust fiber infrastructure and
extensive network connections, including global cloud on-ramps, positions the region for
carriers, subsea cables, and hyperscale on-ramps. accelerated growth and could attract larger-
scale deployments.
In 2024, the big news in this market was the
creation of the new Vernon submarket. Just
southeast of downtown Los Angeles, Vernon is
reshaping the data center landscape. Operating
with power from Vernon Power Utility, Vernon
has emerged as a strategic market enabling

32 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$170 - $190 $275 - $350 71% 11.3%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 50 100 150 200 250 300 350
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
One Wilshire High Cost
A connectivity hub for the West Coast, it Land, power, labor, and construction costs
has solid fiber infrastructure and cloud on- are some of the highest in the nation.
ramps in downtown Los Angeles.
Climate Risk
Vernon Submarket Los Angeles is not unfamiliar with natural
This industrial city, with independent power disasters, including earthquakes, fires, and
delivery and a more flexible entitlement mudslides.
process, is set to reshape the Los Angeles
market, adding over 100MW. Competitive Markets
Lower cost data center markets in Arizona,
Proximity to Primary Markets Nevada, Utah, and Oregon offer more
Los Angeles remains an alternative to affordable alternatives.
power-constrained Northern California
for tech businesses, retail users, and
hyperscalers.

U.S. Research Report 33

 Northern California
Northern California remains a top 10 global data Microsoft, Oracle, and NVIDIA are among the
center market and has the highest barriers to entry largest customers here, and Microsoft and Amazon
of any U.S. market. Anchored by Silicon Valley, together comprise more than 60% of absorption
Northern California is driven by its unparalleled in the last five years, underscoring the market’s
concentration of tech talent, venture capital, and dependence on hyperscale activity.
innovation. The state of California is ranked as the
fifth largest economy in the world, and Northern However, the data center market faces significant
California close behind it in the top 25. The data hurdles, including a high-tax environment, steep
center market is characterized by hyperscale and construction costs, and severe power constraints.
local business demand, with high-density build- Silicon Valley Power, Santa Clara’s utility provider,
outs becoming increasingly frequent as the surge has indicated its inability to provide large tranches
in AI and machine learning workloads requires of power for the next 5–10 years, spurring
more power-intensive infrastructure. growth in nearby states. Oregon, Arizona, Utah,
and Nevada offer more favorable conditions for
Market leaders in supply, including Digital Realty, large-scale deployments. It’s no accident that
Vantage, CoreSite, STACK, and Equinix, continue these market sizes have grown significantly in the
to innovate to meet the evolving needs of their last five years. The Northern California market’s
clients. While its data centers may not have the future will likely depend on overcoming these
massive footprints of those in markets like Northern challenges, potentially by innovations in power
Virginia, the region remains a crucial deployment efficiency, creative infrastructure solutions, and/
location for every major technology player — many or regulatory changes.
headquartered in the immediate area. Amazon,

34 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$175 - $215 $250 - $375 85% 13%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Strategic Location Expensive
Northern California has a GDP of over Land, power, and construction costs are
$1.5 trillion, making it a critical some of the highest in the nation. Turnkey
deployment location for major technology construction costs can reach $18 million
and business players. per MW, contributing significantly to the
high rental rates.
Established Infrastructure
The Northern California data center Entitlement Challenges
market is established, with strong fiber Entitlements do not favor data center
connectivity, a skilled workforce, a major expansion, causing spillover growth to
hyperscaler presence, and third-party neighboring states like Oregon, Arizona,
colocation operators. Utah, and Nevada.

High Density Workloads Lack of Power

The rapid growth of AI and machine The power delivery delays must be resolved
learning workloads drives demand for to meet high-density and AI-driven demand.
power-intensive infrastructure, some of
which are already in place.

U.S. Research Report 35

 Northern Virginia
Northern Virginia (NoVA) cemented its position But infrastructure challenges are significant.
as the world’s most prominent data center Dominion Energy has projected possible
market in the past decade. The region’s strategic seven-year delays for power connectivity for
advantages — tax incentives, robust connectivity, large data centers, particularly those requiring
competitive power rates, and low natural disaster more than 100MW. The surge in larger power
risk — continue driving unthinkable growth. requirements from AI applications is adding to
the strain on the grid. In response, developers
NoVA vacancy rates dropped to just 0.3% by like CloudHQ and Iron Mountain are considering
the end of 2024, a major shift since 2019, when project relocations to areas with fewer power
vacancy rates exceeded 5%. As a result of this constraints. An estimated 30%–40% of new
change, leasing rates have increased significantly. developments are now targeting locations
Major operators have responded with substantial in Fauquier and Stafford counties, beyond
investments. Digital Realty committed $236 traditional “Data Center Alley” in Ashburn.
million to land for future development, forming Developers are also adapting within established
a $400 million joint venture with Realty Income areas, using vertical expansion to maximize
Corporation; PowerHouse Data Centers broke power usage within limited footprints.
ground on an approximately 800MW campus in
Spotsylvania County; Google’s planned $1 billion
investment to expand its NoVA campuses further
solidified the region’s position as a critical market
for hyperscalers.

36 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$170 - $190 $275 - $350 170% 22%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Historical Dominance Lack of Power
NoVA is responsible for 70% of the The market’s severe power shortage is
world’s internet traffic and remains constraining new developments and
the largest global data center market. expansions, while available capacity
Every hyperscaler and major data center continues to decline. Operators are
operator is located in this market. struggling to secure sufficient energy for
growing demand.
Expansion to Submarkets
Developers are moving outside Ashburn’s Alternative Markets
well-known “Data Center Alley” into Prince Other strong markets like Atlanta and the
William County, Leesburg, and Sterling. Carolinas offer lower land costs and a
faster time to market.
Strategic Location
NoVA is positioned to serve large cities like High Barriers to Entry
New York, and provides connectivity to The market faces escalating development
Europe, South America and Africa. costs, increasingly limited land availability
and a complex regulatory landscape.

U.S. Research Report 37

 Phoenix, AZ
The Phoenix data center market continued to but it’s not clear whether it can be scaled across
be an appealing destination for data center the market quickly.
operators and users in 2024. Several key drivers
in the market have attracted major colocation Despite some of these challenges Phoenix’s
players like Digital Realty, QTS, Iron Mountain, strong fiber and data center-friendly policies
Edgecore, Compass, CyrusOne, Aligned, NTT, continue to make it highly attractive for data
STACK, Stream, Prime, and Vantage. Originally center investments.
the Phoenix market was defined as downtown
and Chandler. Submarkets such as Mesa,
Goodyear, and El Mirage are attracting strong
hyperscale projects, including presence from
Microsoft, Meta and Oracle.

Phoenix offers unique tax incentives for data

centers, sustainable power options, a low cost
of power, and available land with low natural
disaster risk. However, as AI drives most of
the new hyperscale demand, its growth could
be limited by power and water constraints.
Microsoft is testing a zero-water looped system,

38 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$130 - $170 $175 - $350 245% 28%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers U.S. Research, Green Street Sources: Colliers U.S. Research, datacenterHawk

Inventory (MW)
2019
2024
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000
Commissioned Planned

Sources: Colliers U.S. Research, datacenterHawk

Tailwinds Headwinds
Tax Incentives Lack of Water
The Phoenix market offers a 10-year waiver Extreme desert heat and water scarcity pose
on state, county, and local sales taxes for significant challenges for high-density, AI-
data center equipment and labor services. driven deployments, as traditional cooling
systems depend heavily on water, which may
Low Barriers to Entry be insufficient to meet cooling demands.
Phoenix has quickly gained traction for
its advantages as a primary data center Lack of Power
market: lots of available flat and low land, Similar to challenges in other primary data
low power and operating cost, with few center markets, the Phoenix market needs
natural disaster risks. to find more access to power to support
continued expansion.
Favorable Business Incentives
The Phoenix market has experienced Nearby Competitive Markets
significant business and economic growth, Phoenix is challenged by data center growth
driven by job creation, major corporate in nearby markets that can build to scale.
investments, and a booming technology
and manufacturing sector.

U.S. Research Report 39

 INTERN A T IO N A L MA R K E T AN ALY S I S

India
India’s data center capacity has surged by 143% Chennai and Hyderabad are also poised for
since 2019, to an estimated 906MW in 2024. significant expansion, with strong infrastructure
This exponential growth, driven by soaring data and a favorable regulatory environment.
consumption, supportive regulations, and robust This growth will be supported by substantial
investments, positions it as one of the fastest- investments in the segment by data center
growing data center markets in the APAC region. operators, hyperscalers, and institutional
investors betting on India’s growing data center
Affordable power and real estate, attractive market. Data centers in India typically provide
yields, and strong demand from hyperscalers estimated levered yields of 16%–17% and are
have made the market highly sought-after. being favored for asset diversification benefits
Mumbai continues to be a relatively matured and long-term risk-adjusted returns.
data center market, hosting half of the data
center capacity of the country. Due to large-
scale expansion by data center operators and
hyperscalers, capacity is likely to double in
the next three years. Mumbai may account
for about half of the new additions because of
submarine cable connectivity, landing stations,
and internet exchanges.

40 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$69 - $92 $80 - $115 143%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth
(Deals >500kW) (Deals <500kW) Since 2019

Source: Colliers India Source: Colliers India

Inventory (MW)
2019
2024
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200
Commissioned Planned

Source: Colliers India

Tailwinds Headwinds
Massive Data Consumption & Cloud Infrastructure & Energy Constraints
Adoption Reliable uninterrupted power and efficient
Rapid digital transformation and the cooling solutions are obstacles.
increasing shift to cloud-based services are
driving an exponential rise in data storage Skilled Workforce Availability
and processing needs. A limited number of qualified professionals
are available for data center management.
Robust Investment & Regulatory Support
Favorable policies such as the Digital Entitlement Challenges
Personal Data Protection Bill and robust Securing suitable land in strategic
investments from hyperscalers and locations is challenging, due to complex
institutional players are accelerating zoning regulations and land acquisition
capacity expansion. complications.

Lucrative High-Yield Option

Relatively lower real estate costs and
attractive yields of 16%–17% allow
asset diversification and enhanced risk-
adjusted returns.

U.S. Research Report 41

 Indonesia
Indonesia, Southeast Asia’s largest economy, Investing in connectivity, energy and workforce
is rapidly transforming its data center market. development will be crucial to resolve uneven
Historically lagging behind Singapore due to fiberoptic distribution hindering nationwide
inferior infrastructure, the country is now expansion. The country also faces a talent gap
attracting major investments from global in both new and existing professionals. Strong
hyperscalers, tech giants, and AI-driven cloud competition from Malaysia and Singapore could
services. Key players like Alibaba, Google, and position them as regional strategic markets. If
Microsoft are expanding in Jakarta and Batam, the market can overtake these challenges, it will
driving steady market growth. rise to its potential as a top data center market
in Southeast Asia.
In 2024, Indonesia’s data center landscape
evolved, with decentralization and edge
computing. Cities like Surabaya, Batam, and
Bandung are emerging as strategic markets,
improving latency and addressing rising
internet consumption, particularly high-
bandwidth video content.

42 2025 Data Center Marketplace Report

Inventory (MW) Development Trends

2019
2024 64%
0 100 200 300 400 500 600 700 800 900
Market Growth
Commissioned Planned Since 2019

Sources: Colliers Indonesia, Indonesia Data Center Provider Organization Sources: Colliers Indonesia, Indonesia
Data Center Provider Organization

Tailwinds Headwinds
Government Initiatives Lack of Competitive Advantage
Local regulators are mandating data There is a lack of skilled labor, land prices
storage, aiming to enhance the country’s are increasing, and regulatory concerns
digital infrastructure. are growing. Neighboring countries are
also competing to become the next subsea
Emergence of the AI Cloud cable market.
Indonesia is a key connectivity area in
Southeast Asia, attracting global tech Infrastructure Concerns
companies and hyperscalers expanding Road networks, fiber connectivity, and
their footprint. utilities may be inadequate for large-scale
data centers.
AI & Cloud Growth
High-density deployments are emerging, Lack of Power & Water
and demand is increasing for low-latency Power availability and water supply is
applications. limited.

U.S. Research Report 43

 Italy
The Italian data center market, following the Growing AI needs are also guiding major
European trend, is recording surging demand hyperscalers to look at alternative locations
from both investors and operators because of offering more power and business scalability
available power, reduced latency, and strong than Milan, the most established market.
connectivity infrastructure.

Milan, in particular, has a strategic position

in Europe for its connectivity and sea cable
connections. Due to the scarcity of land within
the high-demand restricted areas for data center
operators, there is a noticeable shift to new cities
and submarkets outside of Milan.

Regulatory constraints and the lack of clear

urbanistic guidelines on developments — along
with ESG targets — are pushing investors and
operators to seek brownfields rather than
greenfields, helping to create a positive social
outcome by giving new life to abandoned
industrial areas.

44 2025 Data Center Marketplace Report

Inventory (MW) Development Trends

2019
2024
€ 1M
0 100 200 300 400 500 600 700 800
Land Price
Commissioned + Planned per MW

Source: Colliers Italy Source: Colliers Italy

Tailwinds Headwinds
Digital Services & Cloud Demand Entitlements
As digital transformation accelerates, In Italy, obtaining permits to build and
companies need stronger infrastructure to operate data centers can be a lengthy,
support cloud-based services, leading to complex process. Navigating local and
greater reliance on data centers for hosting environmental regulations can slow down
and managing large volumes of data. new development.

Telecom & 5G Growth Land Availability

With the rollout of 5G, there’s a rising Land availability, especially in urban areas
need for enhanced data storage and with strong connectivity, is often limited. In
processing. Data centers play a crucial role some regions, high real estate prices make
in supporting the increased connectivity it difficult to secure capacity for large-scale
and data flows from new technologies. deployments.

AI & Big Data Infrastructure Challenges

AI’s rapid adoption and the growing need for Infrastructure including power supply, fiber
data analysis require advanced computing networks, and cooling systems may be
resources, which boosts demand for high- insufficient throughout Italy to support high
performance data centers capable of density deployments.
handling AI workloads and large datasets.

U.S. Research Report 45

 London, England
London remains the largest of the primary While London represents approximately
European or FLAP-D (Frankfurt, London, 80% of the UK data center market, it’s mostly
Amsterdam, Paris, Dublin) markets. Third-party concentrated within the core West London
operators dominate the London data center market, the area most constrained in terms
market, accounting for nearly 70% of its supply. of power. However, outside of London, power
While major cloud providers are acquiring is more readily available at the desired scale,
sites to self-build, power constraints limit their driving increased interest in these areas as
ability to deliver them, keeping them reliant on AI-driven demand grows. Consequently, in
colocation operators to deliver the capacity. September Blackstone/QTS announced a £10
billion investment in a new data center campus
Although third-party operators control most in Blyth, Northumberland, to become one of
supply, they also now face power constraints, Europe’s largest AI data center developments.
making it difficult to meet strong demand. In
short, there is more demand than supply, and
in this market, users have less leverage. Annual
absorption is expected to exceed new supply for
the third consecutive year.

46 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

£110 - £125 £165 - £350 55%

£/kW/mo Net of Electrical £/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth
(Deals >500kW) (Deals <500kW) Since 2019

Sources: Colliers UK, DC Byte Sources: Colliers UK, DC Byte

Inventory (MW)
2019
2024
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400
Commissioned Planned

Sources: Colliers UK, DC Byte

Tailwinds Headwinds
Cloud & AI Adoption Power Constraints
London’s role as financial powerhouse, Power shortages are resulting in less
together with the increasing demand for available capacity, which is already
cloud computing, big data analytics, and struggling to meet demand levels.
AI, is driving hyperscale expansion in this
market. Competitive Markets
Frankfurt’s ability to deliver new capacity
Strong Connectivity is challenging London’s position as the
London remains one of Europe’s most largest of the primary European or FLAP-D
interconnected cities, with key subsea markets.
cables and power networks.
Land Availability
Emerging London Submarkets Limited supply, high land costs, and strict
The emerging urban core, particularly in zoning regulations represent a major
the Docklands, hosts high-density, low- challenge. Competition with other asset
latency facilities designed for the financial class developments further restricts
and tech sectors’ demand. suitable sites.

U.S. Research Report 47

 Madrid, Spain
Madrid continues to be the most demanded Notable recent announcements include Oracle’s
area for data centers in Spain, due to its better $1 billion investment in its third cloud region in
location, connectivity, and business activity. Madrid and Nabiax’s 10MW expansion across
Madrid is now a hot spot for all types of clients, Alcalá de Henares (7.5MW) and Julian Camarillo
hyperscalers in particular. In recent years, third- (2.5MW), for two hyperscalers. International
party operators’ like Nabiax, Equinix, and Digital operators Pure and Prime also plan new
Realty have shifted their strategy. They are projects, a 30MW facility in Meco and a 40MW
focusing their available supply on hyperscale DC in Alcobendas, respectively.
customers and designing the development
pipeline to meet their requirements.

Over the past year, both supply and planned

capacity in Madrid have slowed due to delays
in the delivery of power supply. Despite this,
rising AI-driven demand and robust fiber
infrastructure in northern Madrid (along the
A-1 and A-2 corridors) have spurred plans
for new data center projects, set to increase
installed capacity nearly fivefold—from 164MW
to 792MW in the coming years.

48 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

€110 - €150 €180 - €300 64%

€/kW/mo Net of Electrical €/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth
(Deals >500kW) (Deals <500kW) Since 2019

Source: Colliers Spain Source: Colliers Spain

Inventory (MW)
2019
2024
0 100 200 300 400 500 600 700 800
Commissioned Planned

Source: Colliers Spain

Tailwinds Headwinds
Strategic Location Lack of Power
Madrid’s central location within the Iberian Power capacity saturation and
Peninsula makes it the primary hub for transmission/distribution delays have
the distribution and reception of content, affected new project announcements.
concentrating the majority of the country’s
demand. Entitlement Risks
Urban planning and power risks associated
Excellent Infrastructure could delay project commissioning for
Madrid is one of the best interconnected years.
areas in the world, with an outstanding fiber
network already deployed. Alternative Markets
Lack of suitable land plots with power
Hyperscalers’ Presence secured has caused operators to look
Leading hyperscalers have established their elsewhere.
availability zones along Madrid’s northern
corridor to accommodate the majority of
both existing and planned supply.

U.S. Research Report 49

 Santiago, Chile
Chile has established itself as one of the most Concepción are gaining traction, supported
dynamic data center markets in Latin America, by government incentives and increasing
because of economic stability, advanced demand for cloud services. The Chilean
digital infrastructure, and access to renewable market is expected to add over 100MW of new
energy. Santiago, the country’s main tech and capacity in the coming years, with the entry
administrative hub, has historically been the of hyperscalers and operators specializing in
center of activity, with key players like Google, artificial intelligence. This growth, combined with
Odata, Ascenty, and Equinix expanding in the the transition to clean energy and a favorable
region. The country’s connectivity is further regulatory environment, reinforces Chile’s
strengthened by submarine fiberoptic cables, position as a key market for digital infrastructure
including the upcoming Humboldt Cable, which development in the region.
will directly connect Chile and Asia, enhancing
Chile’s role as a strategic interconnection point.

In 2024, new investments entered the market,

focusing on geographic diversification and
scalability. Projects in the Metropolitan Region
and emerging locations such as Valparaíso and

50 2025 Data Center Marketplace Report

Inventory (MW) Development Trends

2022
2024 45%
0 100 200 300 400 500
Market Growth
Commissioned Planned Since 2022

Source: Colliers Chile Source: Colliers Chile

Tailwinds Headwinds
Hyperscale & AI Expansion High Power Cost & Infrastructure Constraint
Odata and Google are launching cloud Despite abundant renewables, energy
regions in Chile, increasing demand prices remain volatile, and grid
for data centers. The rise of AI and infrastructure challenges can limit large-
machine learning further accelerates scale deployments, especially in emerging
the need for scalable, high-performance regions.
infrastructure.
Environmental Risks
Enhanced International Connectivity Chile’s high seismic activity and potential
Sea cable projects, including the Humboldt natural disasters pose challenges for
Cable linking Chile directly to Asia, data center design, requiring higher
strengthen the country’s position as a investment in resilience and disaster
regional data center market, improving recovery solutions.
latency and global interconnection.
Entitlement Challenges
Sustainability Lengthy permitting processes, evolving
Chile’s strong solar and wind energy data protection laws, and complex
capacity makes it ideal for sustainable environmental regulations can delay
data centers, helping companies lower new projects and increase operational
costs and reduce carbon. uncertainty for investors.

U.S. Research Report 51

 Toronto, Canada
The Greater Toronto Area is one of Canada’s Due to limited infrastructure, however, Toronto
largest data center markets, and the city continues to benefit from robust demand for
is considered a gateway to international colocation services that require low-latency
commerce. The area benefits from its strategic access to the city’s financial and technology
location, robust infrastructure, and proximity sectors, rather than primarily being a market for
to major business hubs. The headline leading hyperscalers. Montreal, Calgary, and Vancouver
Canada’s abundant data center growth is its are increasingly capturing hyperscale market
commitment to clean energy resources. The share that historically would have gone to
country’s dedication to hydroelectric capacity Toronto, particularly for larger deployments
offers reliable, renewable power at competitive requiring big power capacity.
rates compared to U.S. markets, and is a
compelling value proposition for expansion.
Recent entrants like Microsoft, Yondr, and STACK
have entered the conversation with significant
planned capacity coming online by 2027.

52 2025 Data Center Marketplace Report

Market Rent Snapshot Development Trends

$145 - $190 $215 - $375 105% 15%

$/kW/mo Net of Electrical $/kW/mo Including Electrical
Wholesale/Hyperscale Retail Market Growth CAGR
(Deals >500kW) (Deals <500kW) Since 2019 Since 2019

Sources: Colliers Canada Research, datacenterHawk Sources: Colliers Canada Research, datacenterHawk

Inventory (MW)
2019
2024
0 50 100 150 200 250 300 350 400 450 500 550 600
Commissioned Planned

Sources: Colliers Canada Research, datacenterHawk

Tailwinds Headwinds
151 Front St. West Infrastructure Constraint
Toronto continues to be one of the largest Sites demanding big power (>200MW) are not
North American cross-border internet readily available for near-term deployments.
gateways.
Increased Cost
Sustainability Options Land continues to cost more than it does in
Power almost entirely generated from other similar-sized markets.
hydroelectric and nuclear plants.
Government Regulations
Strong Business Environment Interest from AI deployments is limited due
Toronto is corporate Canada’s primary to data sovereignty rules and corporate
location for finance, tech, and healthcare. taxes.

U.S. Research Report 53

CON TAC T S

Raul Saavedra
Vice Chair, Head of
Data Center Advisory | Americas
+1 415 293 6202
[email protected]

Steig Seaward
Senior Director,
National Research | U.S.
+1 303 888 3177
[email protected]

colliers.com

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