The US data center market has doubled in size in just four years, according to a mid-year report from JLL.

However, vacancy is also at a record low of three percent, with occupancy increasing at a 30 percent CAGR since 2020.

The US is estimated to have 12GW of existing colocation data center capacity, double the 6GW it had in 2020.

Northern Virginia continues to reign supreme as the largest US market and accounts for nearly half of this growth. The fastest-growing markets include Austin, Texas; Salt Lake City, Utah; Atlanta, Georgia; and Las Vegas, Nevada.

Absorption in the first half of 2024 has reached a record of nearly 2.8GW; a ninefold increase since 2020. Absorption was concentrated in four markets; Atlanta, Northern Virginia, Chicago, and Phoenix.

For the first time, Atlanta took the top spot for absorption with 815MW, surpassing Northern Virginia at 603MW.

“Colocation capacity under construction in the first half of 2024 has nearly leveled off at 5.3GW, which still equates to an astonishing $53 billion-plus in asset value,” Matt Landek, managing director, US data center work dynamics and project development and services lead at JLL.

Atlanta was also named the top market for colocation capacity under construction. Construction across the US has increased by more than sevenfold in the last two years.

However, the report said 84 percent of new development has already been pre-leased and asking rents also continue to rise between 13 to 37 percent year-over-year.

Landek added: “While leveling off may speak to concerns about power loads, construction is still at extraordinary levels, having increased more than seven times in just two years, and both primary and second markets continue to expand despite a perception of limited power capacity.”

The report details that while some areas are experiencing power exhaustion, other regions continue to have capacity for data center development, though it does not provide specifics.

The data center industry is not the only power-hungry sector, with manufacturing reshoring and electric vehicle adoption also challenging the grid.

AI boosts data center demand

AI has represented around 20 percent of new data center demand over the last year, JLL believes although confidentiality clauses make putting an exact figure on this difficult. The report adds that AI capex totals more than $300 billion in recent years, with investment accelerating in 2024.

“The growing investment in AI is translating into significant data center demand and revolutionizing the way data centers are designed,” said Andrew Batson, head of US data center research for JLL. “AI runs on the latest generation GPUs, which require more power to operate and emit more heat, so newer data centers require specialized cooling methods like rear door heat exchangers or direct-to-chip liquid cooling.”

Retaining a workforce in the industry

Hiring and retaining employees has also become a significant challenge for data center operators. An estimated 10 percent of data center roles at existing facilities are unfilled and only around 15 percent of applicants meet the minimum job qualifications.

“The industry cannot grow for the future if it cannot retain current employees and attract new ones. Employers must focus on providing positive experiences for employees and implement new approaches to solving staffing challenges while also navigating fierce competition for talent and employee burnout," said JJL's Landek. "At the same time, the industry needs to expand the labor pool through secondary education exposure, technical development programs and outreach to underrepresented population segments".

A report from CBRE last month said cloud and AI demand was driving North American data center vacancy to a record low, despite supply continuing to grow by a double-digit percentage.