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3/11/25
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This report provided by real estate services firm CBRE
Silicon Valley data center leasing nearly doubled in 2024 despite severe power constraints and delivery delays, according to CBRE’s latest North American Data Center Trend Report. Growth in artificial intelligence (AI) spurred leasing activity, as well as tech companies’ desire to co-locate in the San Francisco Bay Area.
Silicon Valley net absorption – a measure of leasing activity – was 45.2 megawatts (MW) in H2 2024, up from 25.7 MW in H2 2023. There was 167.8 MW under construction in H2 2024,78% of which was pre-leased. This was up from 154.2 MW under construction in H1 2023.
“We’ve seen an uptick in data center leasing by artificial intelligence companies in the region who want the ability to process their data nearby but must endure power delays and rent premiums. Persistent power and land constraints have altered the development and leasing process, and limited the availability of larger capacity data centers,” said Jerry Inguagiato, senior vice president with CBRE’s Data Center Solutions team in the San Francisco Bay Area. “Power in Silicon Valley is currently expected to deliver in five years or more, putting pressure on developers and owners to explore alternative power sources amid growing demand.”
The vacancy rate in Silicon Valley was 5.5% in H2 2024, down from 6.4% in H1 2024. Smaller occupier requirements are most common due to lack of new supply coming online, with most being 10 MW or less. In H2 2024, an AI-related occupier leased 9 MW in Newark, the largest block of existing capacity available.
Silicon Valley remains the most expensive data center market, but growing demand and power constraints across the U.S. are driving up rental prices. Silicon Valley rental rates have held steady at $155-250 kW/mo since H2 2022. The next highest was Northern Virginia at $175-225 kW/mo in H2 2024, up from $150-190 kW/mo in H2 2023.
National Trends
CBRE’s latest North American Data Center Trend Report found the North American data center sector doubled the amount of supply under construction in 2024 from the previous year to a record 6,350.1 megawatts (MW)—a 12-fold increase from the 456.8 MW under construction in 2020.
This surge highlights the growing need for data centers that can meet the power demands of AI companies.
Last year, the eight primary North American data center markets* saw a significant uptick in completed construction, with total supply reaching 6,922.6 MW—a 34% year-over-year increase. This growth outpaced the 26% increase in new supply in 2023. Yet the sector still is struggling to meet current demand due to extended construction timelines driven by power constraints and supply chain delays.
In 2024, the average vacancy rate in primary markets reached a record low of 1.9%. Vacancy rates decreased across all primary markets for the first time since CBRE started tracking the data center sector in 2013. In tandem, the national average lease rate rose to a record $184.06 per kW/month, up 12.6% from a year ago, marking the third straight year of double-digit percentage increases.
The power demand of artificial intelligence is a key influence on site selection as occupiers prioritize sites with power available in the next 18 to 24 months, a short timeframe in the current market. Sites with access to power are attracting attention from developers and investors regardless of location, which is a shift from previous years. Markets in North Carolina, Northern Louisiana and Indiana are positioned for significant growth due to greater power accessibility, available land and tax incentives.
Top Data Center Markets
Primary market net absorption jumped from 329.6 MW in 2020 to 1,809.5 MW in 2024—a 450% increase in just four years. In 2024, Atlanta emerged as the national leader in net absorption, achieving 705.8 MW of positive net absorption — nearly 39 times higher than year-end 2023 (18 MW). Notably, this is the first time any primary market has surpassed Northern Virginia in net absorption since CBRE began tracking the sector.
Despite being outpaced in overall net absorption, Northern Virginia remained the largest data center market with 2,930.1 MW of total inventory, 17% larger than a year prior due to robust construction. Northern Virginia recorded 451.7 MW of total absorption in 2024.
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