North American data center demand surged last year, driving a record amount of construction, with Phoenix boasting some of the highest average asking rates ($170 – $210) for 250-500 kilowatt (kW) per month, according to CBRE’s latest North American Data Center Trend Report.
Phoenix’s total inventory increased to 602.8 megawatts (MW) (a 67% increase year over year), ranking fourth largest among the North American primary data center markets*. “With 176.0 MW of product under construction at the end of 2024 – up from 163.5 MW at the same time last year – the market is being fueled by interest from developers seeking lower cost of power and tax incentives.”
Phoenix’s vacancy rate dropped to 1.9%, a significant decrease from the previous year, and a record low, which can be attributed to the 245.5 MW positive absorption in 2024.
“The demand for data centers in Phoenix remains robust, said Mark Krison, executive vice president at CBRE. “Last year, we saw unprecedented growth, fueled in part by the increasing need for AI and digital services. The growth seen in the Phoenix market is highlighted the surge of inventory and increase in data center construction.”
National Trends
CBRE’s latest North American Data Center Trend Report found the North American data center sector doubled the amount of supply under construction in 2024 from the previous year to a record 6,350.1 megawatts (MW)—a 12-fold increase from the 456.8 MW under construction in 2020.
This surge highlights the growing need for data centers that can meet the power demands of AI companies.
Last year, the eight primary North American data center markets* saw a significant uptick in completed construction, with total supply reaching 6,922.6 MW—a 34% year-over-year increase. This growth outpaced the 26% increase in new supply in 2023. Yet the sector still is struggling to meet current demand due to extended construction timelines driven by power constraints and supply chain delays.
In 2024, the average vacancy rate in primary markets reached a record low of 1.9%. Vacancy rates decreased across all primary markets for the first time since CBRE started tracking the data center sector in 2013. In tandem, the national average lease rate rose to a record $184.06 per kW/month, up 12.6% from a year ago, marking the third straight year of double-digit percentage increases.
The power demand of artificial intelligence is a key influence on site selection as occupiers prioritize sites with power available in the next 18 to 24 months, a short timeframe in the current market. Sites with access to power are attracting attention from developers and investors regardless of location, which is a shift from previous years. Markets in North Carolina, Northern Louisiana and Indiana are positioned for significant growth due to greater power accessibility, available land and tax incentives.
Top Data Center Markets
Primary market net absorption jumped from 329.6 MW in 2020 to 1,809.5 MW in 2024—a 450% increase in just four years. In 2024, Atlanta emerged as the national leader in net absorption, achieving 705.8 MW of positive net absorption — nearly 39 times higher than year-end 2023 (18 MW). Notably, this is the first time any primary market has surpassed Northern Virginia in net absorption since CBRE began tracking the sector.
Two markets experienced significant increases in inventory in 2024 from the prior year: Atlanta (1,000.4 MW total inventory, a 222% increase) and Phoenix (602.8 MW total inventory, a 67% increase).
Other notable markets include Dallas Fort-Worth, where developers have 605.6 MW currently under construction with 87% of that new supply preleased. This new supply could double size of the Dallas Fort-Worth market by the end of 2026.
The national building boom extended to secondary markets like Austin, where there is 463.5 MW of supply under construction.
To read the full report, click here.
*The eight primary North American data center markets are Northern Virginia, Dallas-Fort Worth, Silicon Valley, Chicago, Phoenix, New York Tri-State, Atlanta and Hillsboro.
