Data Centers on the Move: Why Texas Is Set to Lead

The expansion of data center construction across North America is pushing the industry beyond its long‑established strongholds. A recent study shows that roughly two‑thirds of the 35 GW of planned capacity lies outside traditional centers such as Virginia, which has long dominated the market. Texas is set to overtake Virginia as the top destination for data infrastructure, marking a turning point in sector growth.

Vacancy Rates Stay Historically Low

• By the end of 2025, only 1 % of data center space is expected to be vacant for a second consecutive year.
• 92 % of new projects already have commitments from reputable tenants, suggesting scarcity will persist at least until 2030.

Drivers of the Boom

• Large cloud operators and AI firms are the main catalysts, with the five biggest players planning to spend $710 billion on new facilities in 2026 alone.
• Lenders are eager, having provided a record $75 billion in financing last year.

Investment Strategies

• Firms like Nuveen adopt a quick‑turn strategy: build and sell projects to stay ahead of market shifts.
• While demand is strong now, rapid changes could make long‑term holdings riskier.

Power Supply Challenges

• Connecting to the grid can take four years or more, forcing tenants to lock in capacity well ahead of time.
• This drives developers toward locations with ample power availability; some companies consider on‑site generators to mitigate risk.
• Nonetheless, most operators still prefer long‑term grid connections.

The Landscape in Motion

With new projects sprouting beyond familiar regions and demand driven by tech giants, the industry is moving faster than ever while navigating power constraints and financing dynamics.