CBRE is the largest commercial real estate services and investment firm in the world. RCRTV’s AI TechTalk spoke with CBRE’s Pat Lynch, executive managing director for Data Center Solutions, and Gordon Dolven, director of Data Center Research, Americas about CBRE’s recently released “North American Data Center Trends H2 2025.”
The report reveals that the North American data center market is experiencing unprecedented demand, with record-low vacancies (1.4% in primary markets) and rising rental rates. Additionally, power availability has surpassed land and labor as the primary constraint, driving developers toward markets with existing power infrastructure and, in some cases, causing two- to four-year development delays.
Inflection point of supply and demand
“Two things that are relevant: we are in an environment with sub-2% vacancy in North America for turnkey colocation space – far under where the demand is for the space from our clients; and, the continued price increases in most markets – mid-teen pricing increases –with continued demand and supply challenges, will continue for the next couple of years,” said Lynch, noting that in the report, the overall vacancy rate in primary markets fell to a record-low 1.4% at year-end, with “scarce available inventory” limiting large-scale deployments and prompting preleasing and off-market activity.
According to Dolven, “it was impressive that the industry continued to grow, on the supply side, so we tracked mid-30% increases across primary markets, in aggregate, but vacancy remains at all-time lows of less than 2%.” He noted that vacancy is a key metric of the inflection point of supply and demand. “We are seeing a lot of new activity in terms of new and tertiary markets, but it’s still impressive to see primary markets that continuing to drive growth on the inventory side, with all the supply side and demand-side demand as well.”
According to the report, Northern Virginia led all primary markets for net absorption in 2025 with 1,102.0 MW. Because established hubs like Northern Virginia are starting to run out of both land and power, the industry is now moving toward other markets, like Wisconsin, Indiana, and Northern Louisiana.
In the report findings, the primary market supply increased by 36% year-over-year to 9,432 megawatts (MW), surpassing the 34% increase in 2024, due to accelerated hyperscale demand. And, primary markets posted “record net absorption” of 2,497.6 MW in 2025 – a surge that reflects accelerated leasing activity and occupancy of new supply.
“Under-construction is up 12x, so not just a 100% increase, but a 1200% increase in the construction that we manage in these primary markets,” explained Dolven. “Not only are we seeing tremendous supply growth in under construction, but under the existing under-construction activity that we are tracking, 80% is pre-leased.”
Changing needs
In our conversation, Dolven emphasized the massive shift in scale, and geography of the data center industry, with the traditional way of building data centers shifting toward larger campuses in new locations.
“Just 5 to 10 years ago, we weren’t talking about 100 and 200 acres required for a data center, so the evolution is toward new markets, which are impressively positioned to captivate all of this new demand, because of the change in size and scale,” said Dolven, referring to the fact new markets are attractive not only because of available land, but also the availability of scalable power infrastructure and in some cases, more competitive tax incentives.
“That’s not to understate the growth of some of these markets, because of the number of data centers that are clustered around these metropolitan areas. For example, in Dallas-Fort Worth, I still think there will be continued growth in that area, but there is a crazy dynamic that we’re witnessing that we did not forecast a few years ago in which West Texas is being evaluated as a new market or a new frontier for data center development,” Dolven said. He thinks the improvements on the connectivity side, and on the fiber side, make it feasible today, “but with some caveats in terms of labor constraints,” he admitted. “It’s fascinating to see these new markets pop up, in addition to the metro areas, which continue to drive activity.”
Different demand landscape and talent pool
The immense energy demands of modern AI infrastructure now dictate project location, forcing a migration to power-dense sites. According to Lynch, there is a shift from “location-first” to a “power-first” data center strategy: “The last couple of years, we’ve seen clients migrate to where the power is. These can be 100-acre sites or 100s of MWs of power, and in some cases, multiple GWs of power.”
He attributes the thirst for power to the training of large language models, with HPC intensity and a need for training clusters that are physically close to each other. While training requires massive, cheap power, Lynch does see a change coming that may require proximity to users. “The next iteration will be more edge, private AI, or inference AI, which will be more latency sensitive and drive more demand back into the major markets, perhaps like New York City and Los Angeles – places that haven’t really seen that demand yet,” predicted Lynch, explaining the fast and responsive requirements of impending inference demands. “Hundreds-of- billions if not trillions have been spent the last couple years building out facilities, and the next iteration of edge and inference has to extend to our cars, our headphones, eyeglasses, homes, in order to get ROI,” said Lynch, who thinks “We’re just in the top of the 1st inning in what’s about to happen.”
How the market adapts will matter, he said, “first, on the supply side, even if it’s not GW-type facilities, but maybe 50- to 100 MW projects that need to be in proximity to the devices and the end users. That will create a different demand landscape.” Lynch went on to explain that while power will remain a big challenge, it’s also important to know the supply side of talent. “Whether construction talent or operational talent, particularly for remote sites, the cost of construction is going to go up because of not only supply issues, but also the talent.”
CBRE is helping to make the U.S. “Data center ready” by creating a “new-collar” talent pipeline for skilled labor. For example, CBRE is a Foundation Partner of Infrastructure Masons (iMasons), and it has internal Apprenticeship Programs and strategic partnerships with SkillsUSA and other organizations that help bridge the technical skills gap and attract talent directly into trades. Additionally, CBRE targets retired and transitioning military personnel through its Military Careers initiative.
According to Dolven and Lynch, jobs growth is going to “shift back toward trades,” particularly construction jobs, electricians, mechanics, plumbers, “who will shift the site designs and the cooling technologies in a truly all-hands-on-deck approach,” said Lynch, with Dolven adding, “we are going bigger and bolder in terms of the size of these developments, so talent is front and center.”
Misinformation in Data Center world
During the conversation, Lynch acknowledged that the industry hasn’t done as much as it could in terms of messaging about job creation.
“There’s a misconception,” said Lynch, that data centers are essentially “jobless warehouses.” This, he says, stems from the mistaken practice of counting only those who run the servers, as opposed to the high-value nature of the roles data centers create and the ripple effect to local economies. For example, on thepower infrastructure side, sites often require new transmission lines, or upgrades to existing lines, so there are a lot of positive downstream effects that have impact on many industries in local economies.
“As an industry, we have to do a better job of messaging on these points,” Lynch said.
In addition to better messaging, Lynch believes there’s a big push for more transparency underway. “The industry has to do better to be transparent in communities where projects are proposed in terms of employment, but also in terms of the massive tax revenue they create… it’s an economic engine for communities, with an inordinate amount of tax revenue coming from an asset that doesn’t put a lot of cars on the roads or bodies in the schools,” he explained, referring to the fact data centers – unlike new housing developments or large retail malls – do not bring hundreds of new families into a town. The towns get the tax revenue without having to build new schools or improve roads and other infrastructure.
Global reach, local delivery
“Local matters more than ever,” said Dolven, emphasizing that despite CBRE’s size, the company is proud of its work to maintain a “local view.” With hundreds of researchers and local experts “on the ground,” and a hyper-local focus through its Thrive Fund, CBRE focuses on community characteristics and concerns, investing in localized workforces and sustainability programs.
Dolven points to key markets, like In Loudoun County, Virginia, and Omaha, Nebraska, as examples of places whereCBRE acts as a critical intermediary, providing market intelligence, brokerage services, and specialized data center solutions that deliver the “power-first” requirements of these data center hubs. “These are places where significant revenue comes to the communities from the data centers. In those markets, he said, CBRE experts keep trackof thebottlenecks, power delivery timelines, zoning requirements, and the hotspots for data center expansion.
“We haveFortune 20 companies that are heavy occupants of these facilities,” said Lynch, “and our clients want to be good partners, by helping to fund the schools, parks. Then, by default, the large developers also want to be a good part of that community,” he added.
The shift toward very large, wealth-capitalized entities that are thinking long term mean these projects have a 15 to 20+ year life in these communities. “They go through several refreshes internally, so they are in those communities for extended periods of time,” said Lynch.
That fact makes it increasingly important that data center builders and operators focus on what matters to the local community. “With 3,000 utilities across the U.S., managing those dynamics, the conversations, and the planning, and the process of load interconnection and getting your site energized requires a more local approach than ever. It’s no longer about just going to the city council, but you are bringing in the power component, the fiber, the water, and other elements,” explained Lynch.
Partnership with local entities, as well as transparency, are increasingly commonplace, according to Lynch and Dolven. “There was a period where everything was done under non-disclosure and under the cover of silence, but the evolution of the utility industry means partnering with the communities and eliminating a lot of the middlemen that were ‘land brokers,’ who didn’t have a long-term, vested interests in the communities,” contended Lynch. I believe the industry has moved significantly in the past 12 months, toward transparency and partnering, which is a trend in right direction.” He added, “We have site selectors that localize what we do globally. The volume of activity that we have, and the leadership roles we play is critical in the hundreds of projects that manage – each with unique aspects in terms of communities, utilities, and more.” The goal, he said, is to “get a favorable outcome for everyone involved,” which is why CBRE aggregates “the best and brightest ideas and talent.”
Importance of Sovereignty
Data sovereignty and the growing web of regulations and laws, state by state, country by country, is making sovereignty a critical issue. As AI increases the need for localized data processing, CBRE provides several specialized services to manage sovereignty risks, like residency compliance to meet legal standards for things like GDPR. In addition, CBRE provides localized market intelligence so that specific jurisdictions and local laws are adhered to. This will grow in an importance as requirements to keep data physically closer to end users, like. in smaller regional hubs, become legally required or mandated.
“Headquartered in Denver, we have a global perspective. We see that Europe is ahead of the rest of the world in terms of data regulations and sovereignty, but we think that will proliferate throughout the globe,” said Lynch. That, he said, will create challenges for end-user clients that operate across countries. “We can help those clients and the developers – for example, with compute. You can have a massive project in one state and a service in a different country for some aspects of compute, so it’s important to know the regulatory issues.”
He believes data privacy and sovereignty will be a big piece of strategy in 2026. “As companies and businesses double down on AI tools, they will want their data controlled and protected – that’s a huge demand driver on the colocation side and on-prem/ enterprise side.” CBRE last year joined forces with Nvidia to advise enterprises on scaling AI infrastructure.
This partnership specifically helps clients identify colocation facilities that possess the high-power density required for Nvidia AI operations while ensuring the physical location meets the client’s sovereignty and security requirements. Additionally, CBRE applies its own internal AI governance standards to help clients build similar frameworks for their data centers.
