The hurdles to getting data center projects underway has led to a construction slowdown in the industry's largest hubs, exacerbating the supply shortage for markets with record low vacancy.
At the end of the year, the amount of data center energy capacity under construction in North American primary markets was down year-over-year for the first time since 2020, according to a new CBRE report.
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At the end of 2025, 5,994 megawatts of data center projects was underway in these primary markets, compared to 6,350 MW at the end of 2024. CBRE considers these eight major hubs primary markets: Northern Virginia, Atlanta, Dallas-Fort Worth, Chicago, Phoenix, Silicon Valley, the New York Tri-State and Hillsboro, Oregon.
“Many planned projects remain delayed due to ongoing permitting, zoning and power procurement hurdles, underscoring the complexities of scaling infrastructure,” CBRE’s report says.
This construction slowdown comes at a time when vacancy among already completed data centers in these primary markets is at a record low, with just 1.4% available, according to CBRE.
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And as more companies rely on larger and increasingly powerful data centers to build and process artificial intelligence, their hunger for more computing capacity is contributing to the sector's escalating supply-and-demand imbalance.
“Scarce available inventory continues to limit large-scale deployments, prompting preleasing and off-market activity,” CBRE’s report says.
The tightening supply, enhanced by the increasing cost of building data centers — due to increasing costs of line items like power generation, capital procurement, land acquisition, construction materials and labor — is fueling rent growth.
CBRE’s report says pricing for 3 to 10 MW jumped by 12.5% between the end of 2024 and 2025. It predicts that for the next two to five years, data center rent growth will exceed inflation.
Data center construction is increasingly shifting toward smaller markets. A JLL report earlier this month found that 64% of data center capacity under construction in the U.S. is in “frontier markets” outside of the industry's main hubs.
But there are also indications that the overall pace of data center construction is reaching a plateau. A Moca Systems report in October projected that spending on U.S. data centers would reach $86B this year but would then gradually decline in the following years.
The construction boom is slowing in part because some data center developers are having a hard time financing new projects, despite the high demand for them. The capital needs at the early stages of a project — before a user has committed to it — have skyrocketed due to challenges securing power, and many investors and lenders aren't willing to provide that funding without a tenant signed on.
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