North American Data Center Construction Hit New Heights in 2024 Amid Surging Demand

North American data center pricing approached record levels in 2024, with Northern Virginia once again boasting the nation’s largest inventory, the greatest amount of new construction, and some of the highest average asking rates ($175 – $225) for wholesale colocation space in the nation, according to CBRE’s latest North American Data Center Trend Report.

Leasing activity remains strong in Northern Virginia, with 451.7 MW of net absorption year-over-year and a vacancy rate of just 0.48%, among the lowest in the country. Despite being outpaced in overall net absorption by Atlanta, Northern Virginia remained the largest data center market with 2,930.1 MW of total inventory, 17% larger than a year prior due to robust construction totaling 2,673 MW.

“Rental rates continued to climb across all requirement sizes as the rise of artificial intelligence (AI) workloads is transforming the data center industry, driving unprecedented demand for power-intensive infrastructure,” said Rob Faktorow, a Vice Chair at CBRE who leads CBRE’s Northern Virginia Data Center team. “AI-related occupiers are increasingly influencing site selection, design and operational requirements, prioritizing markets with scalable power capacity and advanced connectivity solutions.”

Investment activity in Northern Virginia included Wren House and BlackRock forming a $1.2 billion joint venture with QTS to acquire a majority stake in three stabilized data centers; Iron Mountain forming a joint venture with an institutional partner to recapitalize two facilities under development in Northern Virginia; and CyrusOne closing on the $154 million acquisition of a self-occupied data center from PowerHouse Data Centers.

Addition notable activity in the market included PowerHouse breaking ground on an 800-MW data center campus in Spotsylvania County; EdgeCore planning a 216-MW data center campus in Culpeper County; and DataBank commencing construction on a 20-MW facility in Loudoun County.

The colocation vacancy rate in Northern Virginia hit a record-low 0.5% in H2, with occupiers finding it difficult to secure 5 to 10 MW of contiguous space in existing colocation facilities due to strong preleasing that has extended to capacity scheduled for delivery in 2027 and beyond for single-building or campus-sized requirements. With limited sites of scale available in core submarkets, greenfield development and site acquisition has continued in newer areas such as the I-95 Corridor south toward Richmond.

National Trends

CBRE’s latest North American Data Center Trend Report found the North American data center sector doubled the amount of supply under construction in 2024 from the previous year to a record 6,350.1 megawatts (MW)—a 12-fold increase from the 456.8 MW under construction in 2020.

This surge highlights the growing need for data centers that can meet the power demands of AI companies.

Last year, the eight primary North American data center markets* saw a significant uptick in completed construction, with total supply reaching 6,922.6 MW—a 34% year-over-year increase. This growth outpaced the 26% increase in new supply in 2023. Yet the sector still is struggling to meet current demand due to extended construction timelines driven by power constraints and supply chain delays.

In 2024, the average vacancy rate in primary markets reached a record low of 1.9%. Vacancy rates decreased across all primary markets for the first time since CBRE started tracking the data center sector in 2013. In tandem, the national average lease rate rose to a record $184.06 per kW/month, up 12.6% from a year ago, marking the third straight year of double-digit percentage increases.

The power demand of artificial intelligence is a key influence on site selection as occupiers prioritize sites with power available in the next 18 to 24 months, a short timeframe in the current market. Sites with access to power are attracting attention from developers and investors regardless of location, which is a shift from previous years. Markets in North Carolina, Northern Louisiana and Indiana are positioned for significant growth due to greater power accessibility, available land, and tax incentives.

Top Data Center Markets

Primary market net absorption jumped from 329.6 MW in 2020 to 1,809.5 MW in 2024—a 450% increase in just four years. In 2024, Atlanta emerged as the national leader in net absorption, achieving 705.8 MW of positive net absorption — nearly 39 times higher than year-end 2023 (18 MW). Notably, this is the first time any primary market has surpassed Northern Virginia in net absorption since CBRE began tracking the sector.

Two markets experienced significant increases in inventory in 2024 from the prior year: Atlanta (1,000.4 MW total inventory, a 222% increase) and Phoenix (602.8 MW total inventory, a 67% increase).

Other notable markets include Dallas Fort-Worth, where developers have 605.6 MW currently under construction with 87% of that new supply preleased. This new supply could double size of the Dallas Fort-Worth market by the end of 2026.

The national building boom extended to secondary markets like Austin, where there is 463.5 MW of supply under construction.

*The eight primary North American data center markets are Northern Virginia, Dallas-Fort Worth, Silicon Valley, Chicago, Phoenix, New York Tri-State, Atlanta and Hillsboro.