Data center vacancy rates are nearing zero, and JLL wonders: How much farther can colo costs drop?
The demand for datacenter space is soaring across North America, Europe, and other regions, driven by the expansion of cloud computing, artificial intelligence (AI), and edge workloads. However, this growth is encountering significant challenges, particularly in the areas of power shortages and grid connection constraints.
North America
The United States leads globally with approximately 53.7 GW of installed data center capacity in 2024, accounting for 44% of the global total. Demand is rapidly increasing, with data center energy usage reaching 7.4 GW in 2023, a 55% increase from the previous year. A projected supply deficit exceeding 15 GW by 2030 is expected in the U.S. alone.
Power infrastructure is a critical bottleneck for operators, with securing electrical power now exceeding challenges of real estate or finance. Grid capacity limitations are causing delays in construction and expansion, especially in high-demand hubs like Northern Virginia, which faces power shortages. Data center development timelines average around seven years, often longer for power infrastructure upgrades, creating a lag between demand growth and capacity increase.
Europe
Europe’s data center capacity was about 11.9 GW in 2024, much smaller than the U.S., but demand is projected to surge sharply. Electricity demand from European data centers is expected to nearly triple to 236 TWh by 2035. Traditional data center hubs such as Frankfurt, London, Amsterdam, Paris, and Dublin are facing grid bottlenecks. Dublin data centers, for example, already consume 80% of the city’s electricity, and new projects are effectively blocked until at least 2028.
Due to these grid constraints, there is a trend toward relocating data center developments to southern and northern Europe, where power availability is less constrained. The EU plans to triple data center capacity within 5–7 years to compete globally in AI, backed by multi-billion Euro investments, but grid readiness remains the paramount challenge.
Other Regions
China accounts for a large share of global capacity alongside the U.S., but an estimated 80% of new infrastructure remains unused, likely reflecting supply-demand imbalances or regulatory challenges. Globally, data center market capacity is expected to grow from about 20,320 MW in 2025 to 37,580 MW by 2030, with a compound annual growth rate (CAGR) of roughly 13.1% driven by AI and cloud demand.
Key Challenges
Power shortages and grid limitations are the foremost constraints worldwide. Electrical grid capacity and upgrades lag behind rapid data center expansion, causing project delays and supply deficits, especially in mature markets. Data center infrastructure development (planning to operation) typically takes about seven years, while grid upgrades may require even longer, exacerbating supply-demand mismatches. Supply chain disruptions, including prolonged lead times and material cost inflation (steel, aluminum, backup power equipment), also impact construction timelines and costs. Operators increasingly focus on energy efficiency, advanced cooling, and sustainable operations to optimize power usage and mitigate grid strain.
In summary, datacenter demand in North America and Europe is growing explosively, but meeting this demand is severely challenged by power grid bottlenecks, long infrastructure development times, and supply chain issues. These challenges are reshaping where and how facilities are built, with growing emphasis on sustainable and scalable power solutions. Much of the construction pipeline in North American datacenters is already pre-leased, and power delays represent a significant hurdle in efforts to alleviate the shortage of new colocation capacity.
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