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New Reports Show How AI, Power, and Investment Trends Are Reshaping the Data Center Landscape

Today we provide a comprehensive roundup of the latest industry analyst reports from CBRE, PwC, and Synergy Research, offering a data-driven perspective on the state of the North American data center market.  To wit, CBRE’s latest findings highlight record-breaking growth in supply, soaring colocation pricing, and mounting power constraints shaping site selection. For its part, […]

Today we provide a comprehensive roundup of the latest industry analyst reports from CBRE, PwC, and Synergy Research, offering a data-driven perspective on the state of the North American data center market. 

To wit, CBRE’s latest findings highlight record-breaking growth in supply, soaring colocation pricing, and mounting power constraints shaping site selection. For its part, PwC’s analysis underscores the sector’s broader economic impact, quantifying its trillion-dollar contribution to GDP, rapid job growth, and surging tax revenues. 

Meanwhile, the latest industry analysis from Synergy Research details the acceleration of cloud spending, AI’s role in fueling infrastructure demand, and an unprecedented surge in data center mergers and acquisitions. 

Together, these reports paint a picture of an industry at an inflection point—balancing explosive expansion with evolving challenges in power availability, cost pressures, and infrastructure investment. Let’s examine them.

CBRE: Surging Demand Fuels Record Data Center Expansion

CBRE says the North American data center sector is scaling at an unprecedented pace, driven by unrelenting demand from artificial intelligence (AI), hyperscale, and cloud service providers.

The latest North America Data Center Trends H2 2024 report from CBRE reveals that total supply across primary markets surged by 34% year-over-year to 6,922.6 megawatts (MW), outpacing the 26% growth recorded in 2023.

This accelerating expansion has triggered record-breaking construction activity and intensified competition for available capacity.

Market Momentum: Scaling Amid Power Constraints

According to CBRE, data center construction activity reached historic levels, with 6,350 MW under development at the close of 2024—more than doubling the 3,077.8 MW recorded a year prior.

Yet, the report finds the surge in development is being met with significant hurdles, including power constraints and supply chain challenges affecting critical electrical infrastructure. As a result, the vacancy rate across primary markets has plummeted to an all-time low of 1.9%, with only a handful of sites offering contiguous 10-MW+ capacity for lease in 2025.

A key shift in 2024 saw Atlanta surpass Northern Virginia in annual net absorption for the first time, recording 705.8 MW of demand compared to Northern Virginia’s 451.7 MW.

Meanwhile, CBRE finds that AI-driven workloads are reshaping the data center geography, with secondary markets—including Charlotte, Northern Louisiana, and Indiana—gaining traction due to favorable incentives, land availability, and power accessibility.

Pricing Trends: Costs Climb Amid Supply Squeeze

CBRE’s analysis noted that, with available capacity at a premium, wholesale colocation pricing in primary markets surged 12.6% year-over-year to a record $184.06 per kilowatt (kW) per month.

Historically, the firm notes that large tenants benefited from bulk discounts; but the scarcity of contiguous capacity has eroded these advantages, tightening cost structures for hyperscale deployments.

CBRE found that Hillsboro, Oregon, saw the sharpest price hike for 3-to-10-MW requirements, with rates soaring 46% year-over-year from $115.00/kW/month to $167.50/kW/month.

Rising construction costs, supply chain disruptions, and increased adoption of advanced cooling technologies—such as liquid and immersion cooling—are further contributing to price escalation, states the report.

Investor Confidence Remains Strong

CBRE concludes that the data center sector remains a top-performing asset class, with H2 2024 transaction volume exceeding $6.5 billion. Despite interest rate fluctuations, deal activity remained robust, with institutional investors, infrastructure funds, and private equity firms aggressively acquiring assets.

Key transactions cited by the new report include the following:

  • Wren House & BlackRock forming a $1.2 billion joint venture with QTS to acquire three stabilized Northern Virginia data centers.
  • HMC Capital acquiring a 32-MW hyperscale facility in Chicago from Prologis and Skybox.
  • CyrusOne securing a $154 million deal for a self-occupied data center in Northern Virginia from PowerHouse Data Centers.
  • Equinix finalizing a $15 billion+ joint venture with GIC and the Canada Pension Plan Investment Board for the operator’s xScale expansion.

CBRE emphasized that the escalating scale of hyperscale campuses is driving valuations upward, with eleven asset sales exceeding $90 million and five surpassing the $400 million threshold.

AI and Network Infrastructure Drive Fiber Investment

The new CBRE data also chronicles how AI-driven workloads are fueling major investments in fiber and connectivity. Recent developments cited by the report include the following:

  • AT&T’s $1 billion agreement with Corning to expand fiber infrastructure.
  • Verizon acquiring Frontier, the largest pure-play fiber provider in the U.S.
  • Lumen partnering with Microsoft to optimize fiber conduit for AI workloads.
  • Meta advancing a 25,000-mile subsea cable initiative linking the U.S. to key global markets.

Looking Ahead: Power Challenges and Emerging Trends in 2025

CBRE forthrightly states that power remains the defining constraint in site selection for new developments. While flood plains have historically influenced site planning, the report finds operators are prioritizing power access, with some willing to invest in raised construction to mitigate environmental risks.

Meanwhile, the shift from coal to renewable power—along with interest in on-site generation, including solar, wind, geothermal, and nuclear—will be a defining theme in 2025, say CBRE. The analysis also notes how the data center industry is also seeing increased traction in natural gas on-site generation as a grid supplement to ease peak load constraints.

Overall, despite the record pipeline, CBRE says that supply is expected to lag behind demand, tightening vacancy rates and driving pre-leasing activity. The report notes that supply chain bottlenecks, particularly for electrical gear, continue to extend lead times beyond three years for large-scale developments. 

Other key data center trends to watch in 2025, according to CBRE, are contained by the following questions:

  • Can hyperscale operators push into rural sites 100+ miles from major metros?
  • Will large-scale on-site power generation gain viability independent of traditional grid interconnection?
  • How soon will Small Modular Reactors (SMRs) receive regulatory approval for deployment?
  • Will sustainable solutions—such as hydrotreated vegetable oil (HVO) for backup generators and alternative concrete materials—become mainstream?
  • How will utilities enhance grid infrastructure to accommodate surging data center power demands?

Finally, recent U.S. regional hotspots and market developments of particular note, according to CBRE, include:

  • Kansas City: Long an enterprise market, Kansas City is drawing hyperscale interest due to Missouri’s competitive tax incentives. Google recently announced plans for a large-scale data center development.
  • Pennsylvania: With abundant natural gas reserves, Pennsylvania is emerging as a focal point for on-site power generation. The state is also evaluating repurposing coal-fired plants for alternative energy sources, with discussions around restarting the Three Mile Island nuclear plant adding a new layer of potential power capacity.

Conclusion

CBRE’s latest analysis confirms that, as 2025 unfolds, surging AI demand, evolving power strategies, and aggressive market expansion will continue reshaping the North American data center landscape. With limited available capacity, operators and investors must navigate supply constraints, rising costs, and evolving energy strategies to stay ahead in this rapidly shifting market.

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New Reports Show How AI, Power, and Investment Trends Are Reshaping the Data Center Landscape

Today we provide a comprehensive roundup of the latest industry analyst reports from CBRE, PwC, and Synergy Research, offering a data-driven perspective on the state of the North American data center market.  To wit, CBRE’s latest findings highlight record-breaking growth in supply, soaring colocation pricing, and mounting power constraints shaping site selection. For its part, PwC’s analysis underscores the sector’s broader economic impact, quantifying its trillion-dollar contribution to GDP, rapid job growth, and surging tax revenues.  Meanwhile, the latest industry analysis from Synergy Research details the acceleration of cloud spending, AI’s role in fueling infrastructure demand, and an unprecedented surge in data center mergers and acquisitions.  Together, these reports paint a picture of an industry at an inflection point—balancing explosive expansion with evolving challenges in power availability, cost pressures, and infrastructure investment. Let’s examine them. CBRE: Surging Demand Fuels Record Data Center Expansion CBRE says the North American data center sector is scaling at an unprecedented pace, driven by unrelenting demand from artificial intelligence (AI), hyperscale, and cloud service providers. The latest North America Data Center Trends H2 2024 report from CBRE reveals that total supply across primary markets surged by 34% year-over-year to 6,922.6 megawatts (MW), outpacing the 26% growth recorded in 2023. This accelerating expansion has triggered record-breaking construction activity and intensified competition for available capacity. Market Momentum: Scaling Amid Power Constraints According to CBRE, data center construction activity reached historic levels, with 6,350 MW under development at the close of 2024—more than doubling the 3,077.8 MW recorded a year prior. Yet, the report finds the surge in development is being met with significant hurdles, including power constraints and supply chain challenges affecting critical electrical infrastructure. As a result, the vacancy rate across primary markets has plummeted to an all-time low of 1.9%, with only a handful of sites

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Microsoft will invest $80B in AI data centers in fiscal 2025

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John Deere unveils more autonomous farm machines to address skill labor shortage

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2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

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OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

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Introducing Gemma 3

For a deeper dive into the technical details behind these capabilities, as well as a comprehensive overview of our approach to responsible development, refer to

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