A major player in the global industrial real estate sector is making its first foray into the booming data center market — and it’s starting in Los Angeles.
Goodman Group, a Sydney-based warehouse and logistics developer, has broken ground on a 49.5-megawatt data center in the city of Vernon, just southeast of downtown Los Angeles. The facility, named Goodman LAX01 Vernon, is the company’s first data center development and marks the launch of a multibillion-dollar expansion into digital infrastructure.
Located on a 5.6-acre site at 3094 E Vernon Ave, the 264,000-square-foot, three-story building will be ready for occupancy in mid-2026. Goodman acquired the former meat-packing site in 2023 for $206 million and is working closely with the City of Vernon on redevelopment. The area, known for being “exclusively industrial,” offers relatively smooth permitting and entitlement processes — an advantage in the tight Southern California market, where new development often requires demolition of existing buildings.
The location — near One Wilshire, an office tower that doubles as the most interconnected data and telecommunications site in the Western United States because of the number of network operators housed there — is typical of where the firm wants to build data centers across North America due to its "redundant power availability, proximity to critical infrastructure, and demand from hyperscale and colocation customers,” said Anthony Rozic, CEO of Goodman North America, in a statement.
Goodman’s LAX01 Vernon is the first of many planned developments. The company expects to break ground on roughly 500 megawatts of data center capacity across North America, Europe, Australia, Japan, and Hong Kong by June 2026. These projects represent nearly half of Goodman’s $8.2 billion global development pipeline. The company says it currently controls a 5-gigawatt global power bank across 13 cities.
The move comes as investor appetite for data centers continues to surge, driven by insatiable tenant demand, rising rents, and limited supply. The Southern California colocation market is underbuilt compared to other major U.S. hubs, with just 315 megawatts of existing capacity, according to JLL’s Senior Director of Americas Data Center Research and Strategy Andrew Batson. That compares with 5,000 megawatts in Northern Virginia, 1,000 in the Pacific Northwest, and 800 in Northern California.
A hot category
Surging demand for storage of AI and cloud computing hardware by tech firms like Amazon, Microsoft and Google has pushed vacancy in North American colocation centers to an all-time low of 2.6% at the end of 2024, according to JLL.
New space is snapped up quickly: more than 72% of the nearly 6.5 gigawatts under construction is already preleased, and second-generation space is often re-leased within weeks. Tenants seeking large blocks of capacity often face a two year wait.
In November, Prime Data Centers opened the three-story, 242,495-square-foot facility at 4701 S. Santa Fe Ave. in Vernon; it's now fully leased by two artificial intelligence firms.
At the same time, developers are battling long lead times for power, which can stretch up to four years in some markets. Utilities are increasingly cautious, rolling out new requirements to manage the flood of requests.
Despite these challenges, demand remains red-hot. The colocation sector has been growing at a 20% compound annual growth rate since 2020. In 2024 alone, more than 2.5 gigawatts of capacity was delivered — and nearly 100% of it was absorbed immediately, according to JLL.