The nation's data center market is showing no sign of letting up as insatiable demand, driven by the rapid growth of artificial intelligence, pushes the sector to record-low vacancy and double-digit percentage increases in asking rents.
The U.S. data center capacity doubled over the past four years to 12 gigawatts, the equivalent of powering about 9 million households, as of mid-2024, according to JLL's U.S. Data Center Report. That's straining an already-taxed power grid and making it more challenging to find workers to operate the newest centers, the report finds.
About 5.3 gigawatts of data center projects are in the U.S. pipeline as of the first half of 2024, down slightly from the same time last year. The amount of power under construction equates to the energy consumption of the Tampa Bay, Florida, region's 1.3 million households at any given moment, JLL said.
Data centers are measured in their power-handling ability as opposed to square footage, so a leveling off in capacity under construction is a potential sign the U.S. power grid can't support development at a faster pace.
Still, demand is showing no signs of slowing, and vacancy is expected to hit 0% in the next few years, said Andy Cvengros, managing director and co-lead for U.S. Data Center Markets at JLL, in an interview.
"Nearly all existing data center capacity is leased with pre-leasing currently at 84%," Cvengros said. "This level of demand is currently unmatched by any other property type.”
Asking rents are up 13% to 37% year over year, depending on the power requirement. Electricity costs, passed along to tenants separate from asking rent, increased 25% in the past three years as the U.S. power grid nears full capacity, according to JLL. Data center operators are having to wait between two and five years for power to become available in some markets, pushing them to sign deals directly with power companies for different types of electricity, according to Cushman & Wakefield's latest Americas Data Center Update.