64% Of New Data Centers Are Being Built Far From Silicon Valley, Virginia

The data center development map is being dramatically redrawn, and a new report shows how that shift is accelerating. 

Since the advent of the sector, the vast majority of North American data center development has been clustered in a handful of key markets — places like  Northern Virginia, Dallas, Silicon Valley, Chicago and, more recently, Phoenix and Atlanta.

A gradual change in the industry’s geography had emerged over the past five years, with a growing share of data centers being built outside of the sector’s major markets. But now, that shift has gone into overdrive.

According to a report from JLL, 64% of data center capacity under construction in North America is located in what the firm calls “frontier markets,” outside of the industry’s longtime hubs.

This shift — coming as total data center capacity in North America is set to nearly double — means a data center landscape that evolved over decades is set to be dramatically transformed in a matter of months.

“The geography of digital infrastructure is changing faster than most people realize,” Andrew Batson, JLL’s global head of data center research and the author of the report, wrote in an op-ed this week. 

The U.S. data center sector has seen its already unprecedented expansion accelerate to a staggering velocity, driven by trillions of dollars in Big Tech spending on artificial intelligence computing power.

The top five hyperscalers plan to deploy $710B in capital expenditures in 2026 alone, according to JLL. More than 35 gigawatts of data center capacity is under construction in North America, development that will nearly double the market’s existing 39 GW of inventory. 

With the bulk of this development wave rising in frontier markets, regions that until recently were data center hinterlands are on pace to surpass some of the industry’s traditional core markets in total capacity. 

According to JLL, the largest beneficiaries of this trend have been West Texas, Tennessee, Wisconsin and Ohio, although new markets from North Dakota to Nebraska are also capturing a growing share of demand. Ohio ranks fourth among regions when it comes to gigawatts in operation or under construction, while both Tennessee and Wisconsin now rank ahead of California. 

Perhaps the most dramatic demonstration of the extent of the transformation underway on the data center landscape is the potential for Texas to overtake Virginia as the world’s largest data center market by 2030, according to JLL, a change that would have been considered laughable just a few years ago. 

The redrawing of the data center landscape is accelerating, in part, because of the increasingly massive scale of data center projects.

While no gigawatt-scale campuses existed prior to last year, JLL’s report identifies more than 10 campuses of a gigawatt or more now under construction. The emergence of these megacampuses means a small number of projects can quickly launch a market’s inventory from zero to more than has been built in decades in some of the sector’s historic Tier 1 hubs. 

Although there are a number of forces driving the decentralization of data center build-out away from the industry’s longtime epicenters, the need for power lies at the heart of the ongoing shift.

Big Tech end users are looking for massive blocks of capacity as fast as possible, but the industry’s core markets are facing increasingly acute power constraints and wait times longer than four years for grid connections. Hyperscalers, and the third-party developers that serve them, are increasingly willing to venture far beyond their traditional data center territory if it means a shorter timeline to hundreds of megawatts of power. 

Additionally, emerging markets with abundant natural gas resources like Pennsylvania and West Texas have grown in large part because they offer an alternative pathway to fast power. Megacampuses with their own generation resources or that acquire power behind the meter account for a significant part of the development pipeline in these and other markets. These projects include the high-profile Stargate data center in Abilene, Texas, being developed for Oracle and OpenAI as well as Meta’s Hyperion campus in Louisiana. 

Power isn't the only factor tilting the speed-to-market balance in the direction of emerging markets. Navigating the approval process for projects in many mature data center hubs is becoming increasingly difficult, with well-organized community opposition and a growing number of regulatory hurdles.

By contrast, many emerging markets are actively courting data centers as an economic development tool and are eager to move projects through the permitting and entitlement process as fast as possible. 

The JLL report also identifies pricing as a factor making frontier markets appealing to developers and end users, with lower land costs, utility rates and construction costs than most mature data center clusters.

“Traditional hubs are hitting hard limits on power, land, and approvals, while frontier markets offer what hyperscalers and enterprises need most: available capacity, reasonable pricing, and speed to market,” Batson wrote.