Chapter 7
Data Centers
U.S. Real Estate Market Outlook 2026
5 Minute Read
5 Minute Read
Trends to Watch
- AI-driven large-scale requirements are reshaping leasing dynamics:
AI-related occupiers continue to drive significant demand for large blocks of contiguous capacity. Historically, discounts were common for 10-MW-plus deployments, but that is no longer the case. Neocloud, GPU-as-a-service providers and AI startups are now paying premiums for scale. Operators catering to these users may need to avoid subdividing space and instead hold full-building configurations to maximize value. - Behind-the-meter strategies are accelerating:
As traditional power sources remain challenged, behind-the-meter solutions, including on-site wind turbines, solar panels and batteries, are gaining momentum in deregulated markets. Operators increasingly view BYOP (bring your own power) as a viable path to meet delivery targets, driving a notable shift toward greenfield development in deregulated states. - AI inference is emerging as a meaningful driver of demand:
Developers, operators and occupiers are closely watching the next phase of AI adoption. Publicly traded operators noted that AI-related workloads represented a significant share of new leases in 2025. The key question for 2026 is whether edge data centers will reach broader commercial adoption as inference workloads scale. - Power cost and delivery speed now outweigh connectivity in site selection:
With power consumption increasing non-linearly, cost of power is becoming the dominant factor in site selection decisions. While fiber redundancy once led the list of priorities, the ability to secure 300-MW-plus deliveries in under 36 months now supersedes pure connectivity considerations.
Outlook
U.S. data center demand continues to reach unprecedented levels and 2026 is on track to set a new record for leasing activity. Vacancy remains at historic lows and pricing is at all-time highs. However, new supply is becoming increasingly difficult to deliver.
Traditional 12-to-18-month timelines for sub-50-MW buildings no longer apply. The shift toward 500-MW-plus AI campuses has pushed construction schedules into multi-year territory. These large-scale developments require multiple on-site substations. Any need for new high-voltage transmission or incremental generation can extend interconnection timelines dramatically, often to 24, 36 or even 48+ months.
Figure 9: Average Data Center Rental Rates in Primary Markets for 250-500kW Requirements
Preleasing activity is expected to remain in the mid-70% range, compared with the historical norm of 40% to 50%.
We expect continued greenfield development in emerging U.S. markets, particularly along Interstate 20 across the Sun Belt and in deregulated electricity markets. Regions with substantial natural gas resources remain especially attractive, with current commodity prices materially lower than peaks seen in 2003–2008 and in 2022. Alabama, Mississippi, Louisiana, Georgia, Florida, South Carolina, North Carolina, Virginia and Pennsylvania are all positioned to remain priority development locations.
Preleasing activity is expected to remain in the mid-70% range, compared with the historical norm of 40% to 50%. Even with a 43% year-over-year expansion in primary-market inventory, preleasing demand shows no signs of cooling.
Figure 10: Preleasing Rate of Under-Construction Data Centers in Primary Markets
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Data Center Solutions
Related Insights
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Artificial intelligence (AI) companies are driving strong demand for data centers across North America that have exceptionally large power capacity to run their applications.
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Data center demand in North America outstrips supply, driving record-low vacancy rates and price increases.
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