The U.S. data-center industry is building capacity at a record pace. It still isn’t building fast enough.
Surging demand from artificial-intelligence and cloud-computing companies has pushed the market into an unusual position: Developers are adding unprecedented amounts of new capacity, yet available supply continues to shrink as customers lease new space almost as quickly as it comes online.
The result is a widening race for electricity, land, infrastructure and development approvals — and increasingly, for political support.
Data-center construction across North America’s eight primary markets increased 24.8% in the first half of 2026, with 7,481 megawatts of capacity under construction, surpassing the previous record reached in 2024, according to CBRE’s latest North America Data Center Trends report.
More than 80% of that capacity was already preleased, up from 74.3% a year earlier, leaving less than 1,500 MW available for preleasing across the primary markets. At the current pace of demand, CBRE estimates that represents roughly six months of supply.
The squeeze is occurring despite a historic expansion of the underlying market.
Primary-market data-center supply rose 33.7% from a year earlier to a record 10,903 MW, while net absorption increased 11.7% to 1,456.2 MW during the first half. Vacancy stood at 1.4%, highlighting how little capacity remains available despite the enormous construction pipeline.
The numbers illustrate the central paradox of the AI infrastructure boom: The industry is adding supply faster than ever, but demand is expanding even faster.
AI Demand Collides With Physical Constraints
Artificial intelligence has fundamentally changed the economics of data-center development.
Hyperscalers, cloud providers and AI companies increasingly require large, contiguous blocks of power for high-density computing facilities. Electricity availability has consequently become one of the most important factors determining where new campuses can be built and how quickly they can become operational.
The constraint extends well beyond electricity generation. Transmission infrastructure, substations, interconnection capacity, land, water, construction resources and permitting all have to move at sufficient speed for a project to reach completion.
That means a developer can have financing, land and a customer lined up and still face significant delays if the necessary power infrastructure or approvals aren’t available.
CBRE Executive Managing Director Pat Lynch said the industry’s challenge is increasingly shifting from demand to the ability to deliver new supply.
“Developers are bringing more projects to market, but occupiers are absorbing new capacity almost as quickly as it can be delivered,” Lynch said.
“The challenge is no longer whether developers want to build. It’s whether power, infrastructure and approvals can keep pace with the scale of demand. Markets that can alleviate those bottlenecks will be best positioned to capture the next wave of investment.”
The scarcity is already affecting pricing.
Average asking rents increased across every major deployment size during the first half of 2026. The largest increase came among users seeking between 3 MW and 10 MW of capacity, where average asking rents rose 8.3%.
The combination of record construction, heavy preleasing and extremely low vacancy is creating an increasingly expensive market for companies seeking large amounts of computing capacity.
Atlanta Becomes the New Construction Leader
The geography of the data-center boom is also changing.
Atlanta became North America’s most active construction market in the first half of 2026, with nearly 2,900 MW under construction, overtaking Northern Virginia.
Northern Virginia nevertheless remains the largest market by existing inventory and recorded the highest net absorption, at 467.7 MW. Vacancy there fell to just 0.2%, underscoring the extreme scarcity of available capacity in the country’s most established data-center hub.
The shift toward Atlanta and other emerging markets reflects a broader search for locations where large quantities of electricity, land and infrastructure can be secured.
But moving into new markets does not eliminate the industry’s fundamental challenge.
As developers venture into communities that historically had little exposure to hyperscale technology infrastructure, they are increasingly encountering residents, local officials and state politicians questioning whether the economic benefits of data-center development justify the demands placed on electricity grids, water systems and local infrastructure.
The Politics of the Data-Center Boom
The rapid expansion of AI infrastructure has become a political issue across the United States, with opposition emerging in both Republican- and Democratic-leaning communities.
Critics have raised concerns about electricity costs, water consumption, noise, environmental impacts, land use, tax incentives and whether the economic benefits of large facilities justify the infrastructure demands placed on local communities.
The opposition is increasingly organized.
In July 2026, opponents staged protests across 42 states, illustrating how resistance to data-center development has expanded beyond isolated local disputes into a broader national debate over the physical infrastructure required to power artificial intelligence.
State governments are responding in different ways.
New York in July became the first state to impose a statewide moratorium on new hyperscale data centers. Gov. Kathy Hochul ordered a pause of state environmental permits for facilities consuming 50 MW or more for up to one year while the state develops a regulatory framework.
Pennsylvania has taken a different approach. Gov. Josh Shapiro signed an executive order in August imposing additional requirements on AI data-center developers, including environmental safeguards, community approval and greater transparency. The order also removed data centers from the state’s fast-track permitting process.
Texas is confronting the issue primarily through the electric grid.
Gov. Greg Abbott ordered an audit of roughly 300 data-center projects in the state’s pipeline amid concerns about their impact on electricity reliability and water resources. The review has added another layer of scrutiny to projects seeking to connect to the state’s power system.
The backlash has also reached local governments. San Antonio officials, for example, are considering new restrictions on data-center development as public opposition grows.
The political response is notable because it crosses traditional ideological lines. Concerns over farmland, water, electricity prices, tax incentives and local control have brought together groups that would not ordinarily occupy the same political coalition.
For the data-center industry, that creates a new variable in an equation that has historically centered on capital, power and customer demand.
A New Bottleneck: Permission to Build
For developers, political resistance introduces another constraint into an already difficult development equation.
Developers can secure financing. They can acquire land. They can sign customers.
But if a project cannot obtain electricity, permits or community approval, the capacity effectively does not exist.
That could become increasingly consequential as the industry moves deeper into the AI buildout.
With more than 80% of capacity already under construction preleased, many occupiers are effectively competing for infrastructure that has not yet been delivered.
CBRE Director of Data Center Research Gordon Dolven said the scarcity of available capacity is changing the nature of the competition.
“The next phase of growth will be defined less by demand and more by where new supply can realistically come online,” Dolven said.
“With more than 80% of space under construction already spoken for, many occupiers are effectively competing for future inventory rather than existing availability. That dynamic should continue to support rent growth and drive expansion into markets that can offer both power and development certainty.”
The implication is straightforward: The locations capable of delivering electricity and approvals may command a growing premium as technology companies compete for increasingly scarce capacity.
The United States does not appear to have a shortage of companies willing to finance data centers or customers willing to lease them.
It increasingly has a shortage of locations where those facilities can be built quickly enough — and where regulators, utilities and communities are willing to accommodate them.
The AI Infrastructure Paradox
The industry’s challenge is therefore becoming a three-way collision:
AI demand is accelerating.
Data-center construction is accelerating.
Political resistance is accelerating, too.
The first two forces are driving an enormous investment cycle. The third could determine how much of that investment actually becomes operational capacity.
Strong AI demand is pushing developers to build more. Scarce power and infrastructure are slowing delivery. Community and political opposition can add another layer of permitting and regulatory friction. Delayed projects constrain supply further, while scarce capacity supports higher rents and encourages developers to seek new markets.
The result could be a widening divide between where AI companies want data centers and where data centers can actually be built.
Markets capable of delivering reliable power, transmission infrastructure, land and regulatory certainty stand to capture an outsized share of the next wave of investment.
Markets that cannot resolve those constraints risk losing billions of dollars of development — regardless of how strong local demand may be.
For investors, utilities, developers and technology companies, that makes data-center real estate increasingly inseparable from energy policy and politics.
The defining question of the next phase of the AI infrastructure boom may not be whether the world needs more computing capacity.
It is whether America can build enough of it — and whether communities and governments will allow it to be built.
English