North America sees 70% jump in data center supply in construction, CBRE report says

By Laila Kearney

NEW YORK (Reuters) - The amount of data center supply under construction in North America's top markets jumped by about 70% compared to a year ago to a record 3.9 gigawatts, according to CBRE Group research released on Tuesday.

Data centers are essentially giant computer warehouses, but they are measured more broadly by the amount of power that they use.

As the world's largest technology companies race to expand their artificial intelligence and cloud computing businesses, power demand from data centers has ballooned.

In the first half of 2024, more than 500 megawatts of new data centers, or roughly equivalent to all of the existing capacity in Silicon Valley, were rolled out in the eight biggest markets in the United States and Canada, according to CBRE.

New data center inventory grew by 10% in the first six months of the year, while jumping 23% from a year earlier, the report said.

The eight main North American data center markets are Northern Virginia, Dallas and Fort Worth, Texas; Silicon Valley in central California; Chicago; Phoenix, Arizona; the New York Tri-State Area; Atlanta; and Hillsboro in Oregon.

At the same time new inventory surged, data center vacancy rates plunged to a record low of 2.8%, CBRE said. Prices for the centers grew, with newer centers typically coming with a premium compared to older ones.

"The demand for high-powered computing has exacerbated the pricing disparity between legacy facilities and new data centers, partially because older data centers don’t have the infrastructure to handle the power demands of today’s users," CBRE's Data Center Trend Report said.

The demand for newer facilities is likely to make smaller markets, including Northern Indiana, Idaho, Arkansas, and Kansas, more desirable, the report said.

(Reporting by Laila Kearney; editing by Jonathan Oatis)