The exponential growth of digital information and processes in the cloud is creating some down-to-earth real estate problems.
Whether it’s being used in proptech, artificial intelligence, social media or other businesses, the amount of data continues to soar — and that growth is necessitating massive new data center developments to house needed technology.
“If the global data center industry in 2024 could be summed up in two words, they would be ‘accelerated growth.’ The industry experienced rapid expansion throughout the year, a trend expected to continue into 2025 and 2026,” said CBRE’s “Global Data Center Market Comparison” report in May 2025. “Artificial intelligence (AI) and machine learning (ML), which gained prominence in 2022, are key drivers of this demand now and into the future.”
Builders are responding.
“By the end of 2024, the data center development pipeline reached nearly 50 million, effectively doubling the volume from five years ago. Capital deployment in data center construction reached an all-time high of $31.5 billion annually in 2024, with no signs of plateauing this year,” reported Newmark in its “2025 United States Data Center Market Outlook.”
But this potential boom faces a number of challenges to be overcome, including site criteria, NIMBYism, power needs and logistics.
Location, Location, Location
The main question is where to build them. Unlike warehouses and distribution centers — which data centers physically resemble — these buildings have very specific needs. Data center development requires access to reliable power and water for cooling, strong network connectivity, local incentives given the extremely high cost of construction and a low risk of natural disasters — CBRE noted that a facility should have no more than 29 hours of downtime per year.
Currently, Virginia remains the largest data center market in the world, CBRE said.
“Virginia’s operational data center capacity is larger than the combined capacity of the next three largest data center markets in the Americas. It also represents more than 25% of total operational capacity throughout North, Central and South America,” the company reported.
But it may not be as dominant for long, as creeping NIMBYism and competition from other areas in the United States increase.
“Local opposition to rapid data center growth is reshaping the regulatory environment in the Richmond market,” reported Avison Young in its “Q2 2025 Data Center Market Overview.”
As of June 2025, Henrico County has placed new requirements and restrictions on data center developments, even including areas previously amenable to such projects. Some companies have withdrawn plans for properties in the county amid opposition.
Other regions are looking decidedly more appealing. Newmark reports that data center development is taking place in at least 23 states around the United States, including Pennsylvania, the Carolinas and Texas.
In late August, social media giant Meta’s $1 billion Kansas City Data Center opened after three years of construction,
“In 2022, we selected Kansas City because it offered excellent infrastructure, a robust electrical grid, a strong pool of talent for construction and operations jobs and incredible community partners,” said Brad Davis, data center community and economic development director at social media giant Meta.
Funds managed by Blue Owl Capital and affiliates of Chirisa Technology Parks and Machine Investment Group recently closed on a joint venture partnership to include $4 billion of funding for previously announced CoreWeave developments in Lancaster, Pa. CoreWeave has invested in the campus and will lease the site. London-based Yondr Group, a leading global developer, owner and operator of hyperscale data centers, has secured a 163-acre site in Lancaster, Texas, just south of Dallas to develop a campus with the capacity to accommodate 550 megawatt (MW) critical IT load. The company also has projects in Northern Virginia and Toronto.
Elsewhere, Vantage Data Centers recently announced a $25 billion investment to develop a 1.4 gigawatt (GW) data center campus in Shackelford County, Texas. Situated on 1,200 acres, the campus will be home to 10 data centers totaling 3.7 million square feet.
“Texas has become a critical and strategic market for AI providers. In particular, the launch of our Frontier campus with 1.4GW of GPU compute capacity marks a watershed moment for Vantage as we deliver on our promise to meet the unprecedented requirements of our customers,” said Dana Adams, president of North America at Vantage Data Centers.
“This investment in Texas will be a significant economic growth driver for the area as we rapidly deploy the digital infrastructure needed to support AI applications.”
In Mississippi’s Rankin County, Avaio Digital Partners is investing $6 billion into a 175-acre campus in the City of Brandon (near Jackson) that it said will host the computer server, networking and data storage technologies that underpin cloud computing and AI applications.
Construction of the first phase of the project, totaling over 600,000 square feet of data center buildings and 116MW of power, will be complete and energized in the first half of 2027.
In late August, Zenith Volts Corp. announced that the Chaves County Commission had granted county approval for a 300-acre data center project located 20 miles south of Roswell, N.M. Designed to support 1.25GW or more of power capacity with expandable land resources, the project is expected to be fully operational by November 2027.
The approved 8,500-acre site will integrate advanced power solutions, including on-site solar, natural gas generators for dependable backup, modular solar-thermal hybrid systems for 24/7 thermal storage, a 250-acre battery energy storage system and geothermal cooling for optimal efficiency.
Power Play
Even if all other elements align, power is critical. Newmark reports that analysis from S&P Global Market Intelligence indicates that the power demand from both existing and planned data centers in the U.S. is expected to total about 30.7 GW once all data centers are operational. However, utilities are set to supply only 20.6 GW of that needed capacity. Newmark reported.
And demand for power globally continues to increase. A report from International Energy Agency notes that the world’s electricity consumption is projected to grow 4% annually through 2027 due to a number of factors.
“The data center development pipeline — already at record heights — would be substantially higher if not for the singular issue of power constraints,” said Newmark in its “2025 United States Data Center Market Outlook.”
Even in areas where power is available, it could take years to build the infrastructure needed, given supply chain shortages.
“These challenges will continu to intensify as the data center sector expands rapidly into new geographies,” JLL said in “2025 Global Data Center Outlook.”
As a result, some developers are taking matters into their own hands. In August, digital infrastructure company Equinix announced that it is working with energy companies including Oklo, Radiant, ULC- Energy and Stellaria that are developing innovative approaches to generating reliable and sustainable electricity to support the needs of Equinix data centers worldwide.
“Access to round-the-clock electricity is critical to support the infrastructure that powers everything from AI-driven drug discovery to cloud-based video streaming,” said Raouf Abdel, executive vice president of global operations at Equinix, in the announcement. “As energy demand increases, we believe we have an opportunity and responsibility to support the development of reliable, sustainable, scalable energy infrastructure that can support our collective future. By working with our energy partners, we believe we can support the energy needs of our customers and communities around the world by helping to strengthen the grid and investing in new energy sources.”
Equinix also designs highly efficient data centers aimed at optimizing energy use. In 2023, Equinix announced plans to expand support for highly efficient advanced liquid cooling technologies — like direct-to-chip — to more than 100 data centers across 45 metros around the world. Nuclear power and natural gas are emerging as preferred solutions, as well.
Saving the Earth
The environment is also a factor for NIMBYism, with some builders focusing on green developments. Like all of its data centers, Meta’s Kansas City Data Center is LEED Gold-certified, and its electricity use is matched with 100% clean and renewable energy.
Albany, N.Y.-based Soluna Holdings Inc., a developer of green data centers for intensive computing applications, recently reached a key milestone with 1 GW of clean computing projects in either operation, construction or development, with the launch of two new Texas-based sites: Project Fei, a solar-powered facility in northern Texas, and Project Gladys, a wind-powered facility in the southeast region of the state.
Project Fei is a 100 MW data center co-located with a 240 MW utility-scale solar farm, Soluna’s second solar-based project to date. Developed in partnership with a global leader in energy infrastructure investment, Project Fei will convert underutilized solar energy into clean, high-performance computing power. The project is currently advancing through land acquisition, power contract negotiation, and Electric Reliability Council of Texas (ERCOT) interconnection planning.
Project Gladys, a 150 MW facility, will be co-located with a 226 MW wind farm and developed in partnership with a prominent U.S.- based independent power producer (IPP) managing over $40 billion in assets and more than 80 energy facilities nationwide.
“Reaching one gigawatt of clean computing projects in our total development pipeline is a transformative moment for Soluna. Getting these projects from development to operational will put us on par with some of the biggest companies in the world when it comes to clean-powered computing capacity, including Amazon, Meta and Google,” said John Belizaire, CEO of Soluna.
The result, Belizaire said, is that the company could possibly effectively displace nearly 48 million metric tons of CO2, equivalent to removing 11 million cars from the road over the life of these assets, and we believe this is just the beginning of what clean computing can do.”
Construction
As with all new construction, logistics is a challenge for data center developers.
“Materials like lumber, PVC, plumbing components, gypsum and concrete have remained relatively immune to supply chain woes and can be sourced rather quickly, while copper wire, steel and light fixtures typically face two- to three-month wait times,” CBRE reported. “The most critical components, like switchgear, chillers, generators and transformers, have lead times exceeding six months, with some taking more than a year to procure. Stockpiling of components, which became more common in 2024, is further exacerbating this issue, as construction speed became a significant competitive advantage for developers.”
But demand remains strong, with vacancy rates at record lows.
“While analyses vary on adoption scenarios, some forecasts, including an October 2024 analysis by McKinsey, suggest that up to 70% of total data center demand will be AI-driven by 2030, up from under 50% currently,” Newmark said. “This trend will require signifi cant further expansion of digital infrastructure for training, inference and other use cases in the coming years.”
