Silicon Valley Data Center Demand Continues to Outpace Supply, Causing Vacancy to Fall Further and Rents to Rise

Silicon Valley's data center market remained one of North America's most supply-constrained markets in the first half of 2026, as strong demand from hyperscale, cloud and artificial intelligence users drove occupancy gains, rising rental rates and continued construction activity, according to CBRE's latest North America Data Center Trends H1 2026 report.

Silicon Valley's inventory increased to 509.2 megawatts (MW), up 33.8 MW from a year ago, and vacancy declined to 4.2%, down 34 basis points year-over-year. Net absorption totaled 22 MW in the first half of 2026, marking the market's return to positive absorption following softer leasing activity at the end of 2025.

The improvement comes as demand across North America continues to accelerate. Primary market net absorption increased 11.7% year-over-year to 1,456.2 MW in the first half of the year, fueled by hyperscale and AI occupiers competing for increasingly limited power capacity. At the same time, primary market vacancy fell to a record low of 1.4%, despite a 33.7% increase in inventory.

"Silicon Valley remains one of the most strategically important data center markets in the world because of its proximity to leading technology companies, AI innovators and cloud providers," said Bill Dougherty, Executive Vice President, CBRE Data Center Solutions group. "Demand continues to be driven by organizations seeking access to power and capacity near the center of innovation, but the market faces ongoing challenges related to power availability, land constraints and the length of the development process."

As available capacity remains limited, pricing continues to rise. Asking rental rates in Silicon Valley range from $200 to $275 per kW per month, among the highest in North America and above most primary markets. The market also has 144 MW under construction, reflecting developers' efforts to meet growing demand despite infrastructure constraints.

CBRE's report found that power availability and infrastructure delivery timelines are increasingly influencing where data center users choose to locate. Across North America, more than 80% of all capacity currently under construction has already been preleased, leaving less than six months of available supply in primary markets at the current pace of demand.

While Northern Virginia remains the largest data center market in North America and Atlanta now leads all markets in construction activity, Silicon Valley continues to occupy a unique position due to its concentration of technology companies and AI development. As demand for computing power continues to expand, competition for available capacity in Silicon Valley is likely to remain intense.

According to CBRE, average asking rents increased across all major deployment sizes in North America's primary markets during the first half of the year, reflecting competition for limited inventory and growing demand from AI-related users.