Texas is poised to overtake Virginia as the global leader in data center capacity, signaling a significant shift in the digital infrastructure landscape, according to a new report from JLL. This transition marks an “inflection point” for the industry, with a substantial 64% of the 35-gigawatt construction pipeline now extending beyond established markets like Virginia, which has long dominated the sector.
This surge in demand is being fueled by the insatiable appetite of hyperscalers and the burgeoning field of artificial intelligence. Compounding this demand, data center vacancies across North America remained at a historic low of 1% at the close of 2025, a trend that has persisted for two consecutive years.
“The data center sector has officially entered hyperdrive,” stated Andy Cvengros, executive managing director and co-lead of U.S. data center markets at JLL. “Record-low vacancy sustained over two consecutive years provides compelling evidence against bubble concerns, especially when nearly all our massive construction pipeline is already pre-committed by investment-grade tenants.”
Indeed, JLL’s report indicates that a remarkable 92% of the capacity currently under construction is already pre-committed. This high level of pre-leasing suggests that vacancy rates are likely to remain subdued through at least 2030. The top five hyperscalers alone are projecting $710 billion in capital expenditures for 2026 to bolster their essential infrastructure, a testament to the scale of investment in this sector.
Financial institutions are clearly recognizing the immense potential, with a record $75 billion in total financing secured by data center projects last year. Global real estate development firm Nuveen is adopting a strategic approach, capitalizing on the current robust demand through a build-and-sell model to effectively manage risk.
“There really is quite a bit of demand, and we think that in the next five years there’s not an oversupply situation,” commented Chad Phillips, global head of Nuveen Real Estate. “There’s going to be evolution pretty quickly, and so that’s why we’re looking at sort of shorter-term builds and then sells.” While the near-term outlook appears strong, Phillips acknowledges that the longer-term predictability of the market remains less certain.
However, the rapid expansion is not without its challenges. Significant headwinds persist, particularly concerning infrastructure constraints, most notably power availability. The average grid connection timeline can stretch to four years or even longer, necessitating that major tenants secure capacity many years in advance. This bottleneck is a primary driver for the expansion into new markets that can offer more readily available power.
“A lot of companies are considering building onsite power generation,” noted Andrew Batson, global head of data center research at JLL. “It reduces risk. Ultimately, though, the overwhelming majority of operators want grid connectivity long term.” This ongoing tension between the need for immediate capacity and the long-term reliance on stable grid infrastructure will continue to shape development strategies and market dynamics.
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