Data center demand climbs as AI needs more power
Writer: Eleana Terán
July 2025 — Demand for data centers across North America continues to surge, driving new development, pricing, and site strategies into record territory.
Total supply in primary markets, including Northern Virginia, Atlanta, Chicago, Phoenix, and Dallas-Fort Worth, jumped 34% year-over-year, nearly 6,923 megawatts (MW), well above the 26% increase in 2023, according to CBRE’s North America Data Center Trends H2 2024 report. And despite the supply boost, vacancy dropped to a record-low 1.9%.
Power remains the defining constraint and catalyst for growth. CBRE notes that at the end of 2024, over 6,350 MW were under construction, more than double year-end 2023, driven in part by AI workloads that require significantly more power and advanced cooling systems. “One of the biggest changes since our last interview has been the rise of artificial intelligence and the corresponding demand for data centers,” Rob Smith, CEO of Sargent Electric Company, told Invest:.
Atlanta overtook Northern Virginia for the first time in annual net absorption, with over 700 MW in 2024. Meanwhile, rental rates for mid-size requirements (250-500kW) rose by an average of 12.6% year-over-year, reaching $184 per kW/month. Certain markets, such as Hillsboro, Oregon, saw the largest rate jump at 46% amid tight supply and strong demand. Sites with ample energy access are seeing competitive interest.
In Southwestern Pennsylvania, Armstrong County Commissioner John Strate told Invest:, “Right now, data centers are showing strong interest in our area because we have ample power, water from the river, and natural gas. These are key infrastructure assets that they need.”
These pressures are making developers and occupiers rethink site selection. Secondary emerging markets are seeing growing investment thanks to tax incentives, available land, and better power accessibility. “One consistent category is our data center work, not only in Dallas or Atlanta but also up and down the East Coast,” said Michael Russell, CEO of H.J. Russell & Company, in an interview with Focus:. “We have developed a degree of expertise with the different dynamics and areas across our markets.”
Globally, the pattern is similar. In CBRE’s Global Data Center Trends 2025 report, vacancy in core hubs fell an average of 6.6% worldwide — down 2.1% from last year. Hyperscale growth is accelerating everywhere, especially in North America, where net absorption among the top four markets more than doubled year-over-year to 1,668 in early 2025. AI-driven demand is pushing the limits of infrastructure capacity, spurring adoption of liquid cooling and even discussions around alternative energy sources like nuclear to keep pace. As Derris Boomer, founder and CEO of Boomer Technology Group, highlighted to Invest: “We’re going to need more data centers. There will need to be discussions on clean energy, and how they go about that.”
Capital markets have responded accordingly. According to the CBRE report, annual North American sales volume for data center assets topped $6.5 billion in 2024, with multiple transactions exceeding $400 million. Investors are betting on long-term fundamentals, despite continued supply chain constraints that keep construction timelines long. “I believe that the macro trends are going to outweigh some of these shorter-term factors,” Greg Padalecki, president & CEO of Alterman Inc, told Invest:. “The drive for data centers and for renewable energy sources is going to outweigh any short-term, smaller event.”
Amid these headwinds, operators are exploring diversified power strategies, from on-site generation using natural gas to renewables and even small modular reactors in the future. Ricky Sakai, senior vice president of investment and business development for Mitsubishi Heavy Industries America (MHIA), added that this is translating into real projects: “Over the past year, we’ve seen a surge in demand for AI and data centers, especially in relation to power generation. Tech companies and hyperscalers are looking for power that is reliable, affordable, and low-carbon. That’s where we come in, offering solutions like gas turbine combined cycle power with carbon capture, and geothermal power systems.”
Telecom and fiber network investments are also scaling up to meet the connectivity needs of modern workloads, including AI and 5G. “The region has a strong need for speed, and our mindset is, you keep building, and we’ll keep showing up,” said Leigh Anne Lanier, market president of Verizon Consumer Group Atlantic South Market, at the Invest: Miami 10th anniversary leadership summit.
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