Power availability and infrastructure delivery timelines are making it extremely difficult for data center inventory to keep up with demand.
The data center market in North America continues to grow at a rapid pace, but construction timelines are increasing so much that data center technology is at risk of being obsolete by the time new facilities are completed.
Data center inventory increased significantly in the first half of 2025 – primary market supply grew by 17.6%, according to a new report from commercial real estate services and investment firm CBRE. But demand outpaced supply, leaving very little wiggle room for new customers or expansion by existing customers.
The vacancy rate is virtually nonexistent; it dropped to a record-low 1.6%, down from 1.9% in the second half of 2024, CBRE reported. On top of that, 74.3% of newly completed capacity in the first half of 2025 has already been committed by way of preleasing activity. That means three-quarters of the newest hosting and colocation capacity was contracted before it even became available.
One significant factor is power availability.
The growth of hyperscalers and increases in AI workloads are driving the power requirements of facilities further into the multi-megawatt range. The power industry moves at a very different pace than the IT world; it’s much slower and more deliberate.
A shortage of power is the primary reason many data center projects are targeting secondary markets rather than heavily congested areas, like Northern Virginia and Santa Clara, said Pat Lynch, executive managing director and global lead of CBRE data center solutions.
Power is more available in smaller markets. “If our client needs multi-megawatt capacity in Silicon Valley, we’re being told by the utility providers that that capacity will not be available for up to 10 years from now,” Lynch said. So, out of necessity, many have moved to secondary markets, such as Hillsborough, Ore., Reno, Nev., and Columbus, Ohio.
Lynch said the lead time for equipment makes it difficult to predict when some large-scale data centers can be completed. A multi-megawatt facility may even require new transmission lines to be built.
This translates into longer build times for new data centers. CBRE found that the average data center now takes about three years to complete, up from two years just a short time ago. Intel, AMD, and Nvidia haven’t even laid out a road map for three years, but with new architectures coming every year, a data center risks being obsolete by the time it’s completed.
Infrastructure delivery timelines have gotten much longer for a variety of reasons. “The scale at which these projects are being built dictates that they’re going to take longer, and then the availability and lack thereof of equipment is a huge issue. I think all of those are playing into the timeframe,” Lynch said. There are supply shortages in everything from servers and power transformers to the concrete and steel needed to build the facilities, he added.
However, what’s the alternative? To wait? Customers will never catch up if they wait, Lynch said. Development and construction must go on, even with short supplies.
So, with capacity in short supply and demand continuing to increase, Lynch said companies should “get in front of it as quickly as possible. We’re recommending to our clients, particularly the enterprise clients, whether it’s an existing site or it’s a potential expansion, get three years ahead of it, ideally, more than that, and start to build your strategy around location where you can get power.”
CBRE has found many of its enterprise clients are renewing with their current providers simply because there’s no other place to go.
“When you think about that, it’s like any form of real estate: You’ve got an imbalance of supply and demand that creates challenges for enterprise clients. So, we highly recommend getting in front of it, ideally years in advance,” said Lynch.
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