One of JLL's newest executives is ready to tackle the surge of demand for data center space in Texas — but dinner comes first.
John Pasta, executive vice president of JLL's data center solutions group in Dallas, is hosting more than 20 family members for a traditional Italian supper during the holiday season. He visited the city's famous Italian grocery store, Jimmy's Food Store, on Monday for the right ingredients to begin making homemade pasta for his lasagna recipe.
Pasta joined JLL this month with 13 years of experience. Most recently he was the director of strategic accounts at QTS Data Centers, which Blackstone acquired. Prior to QTS, he worked at Avison Young as a tenant representation broker for seven years.
"With the huge boom in demand for data center capacity with the advent of [artificial intelligence] and the continued digitalization of our lives, there's been a flip in the market and it's become a landlord's market, where they can demand whatever they want, and there's become this huge need for tenant representation," Pasta told CoStar News.
The insatiable demand for data center space has pushed vacancy to record lows and double-digit percentage increases in asking rents, according to a JLL report. At that same time, nearly all space in the pipeline is pre-leased, with JLL executives estimating about 84% of the incomplete space is already leased to a tenant.
"There's a complete market intelligence imbalance between the landlord and the tenant," Pasta told CoStar News. "The landlord does hundreds of transactions a year and they know the leverage they have, while the tenant doesn't do nearly as many of these transactions.
"At the end of the day, JLL's data center group does hundreds of data center transactions across the globe every single year, and we hope to immediately provide an advantage in helping advise clients from market to market and how they can leverage their requirement and future-proof their needs."
In Texas, executives like Pasta are anxiously waiting for what the new year has to bring from the Electric Reliability Council of Texas. The state's grid operator for more than 26 million customers is expected to release its regional power study guiding future grid development.
The results are expected in the first half of 2025 with everyone "waiting on pins and needles" to see what happens to areas that are already popular with data center developers, like South Dallas, and how this could push farther into central and west Texas, Pasta said.
"It takes time for companies to build new power plants and transmission lines, which is why we are seeing people deploying natural gas generation on-site in Texas and people are coming up with behind-the-meter solutions," he said, adding this has been the case in Oncor's Abilene data center campus and Meta teaming up with Louisiana to build a gas plant to support its newly announced project in the state.
"Texas has a vast amount of electric generation, but we have a transmission problem," Pasta added. "There's a lot of speculation, and we are in purgatory right now. There's a lot of land under contract all around Dallas right now, but we won't have a true sense of what is going on until these sites have power. It's a total arms race."