Data Centers: Global Vacancy Drops to a New Record Low

Vacancy in data centers worldwide has fallen to a new low, highlighting the continued rising demand for data center capacity. Power availability plays a crucial role in this.

TL;DR

• The global data center vacancy rate fell to 6.6 percent in the first quarter of 2025 as demand continues to outstrip supply.

• Power availability remains the biggest growth inhibitor worldwide, leading to the development of new hubs outside of traditional markets.

• Global prices increased by 3.3 percent; AI-related workloads and cloud providers are the main drivers of demand.

• In Europe, the vacancy rate dropped to a record low of 7.4 percent, with new projects increasingly being located away from city centers due to power shortages.

Global Market Overview

The global data center market continues to experience strong growth, with demand significantly outpacing available supply, according to a study by the real estate and investment firm CBRE. This led to a decrease in the global vacancy rate to an average of 6.6 percent in the first quarter of 2025. A major obstacle to this growth, especially in established regions, is limited power availability. This constraint is fostering the emergence of new hotspots such as Richmond in North America, Santiago in Latin America, and Mumbai in the Asia-Pacific region. The average prices for data center services rose worldwide by 3.3 percent to $217.30 per kilowatt per month. Artificial intelligence and other compute-intensive applications are key demand drivers, leading to aggressive pre-leasing and extended construction times.

European Market Developments

In Europe’s four largest data center markets—London, Frankfurt, Paris, and Amsterdam—the vacancy rate fell to a record low of 7.4 percent in the first quarter of 2025. While inventory increased by 7.2 percent over the last year, the pace was slower than before, mainly due to power supply challenges. Amsterdam, in particular, saw little new capacity and dropped to fourth place in Europe’s ranking. London remains the largest market, but power shortages are forcing geographic expansion here as well, with operators looking up to 70 kilometers away from preferred availability zones. Frankfurt, Europe’s second-largest market, is growing strongly but also has to expand to locations outside the city center to meet power requirements. Paris overtook Amsterdam, driven by demand for sovereign cloud and AI services. General challenges in Europe include permitting processes and high construction costs. Brussels and Zurich are mentioned as emerging markets with potentially available power.

All of this will likely lead to increased growth in the countries of northern and southern Europe in the future, while the major locations will see slower growth.

Developments in North America, Asia-Pacific, and Latin America

North America saw a significant 43 percent increase in inventory in its top markets, with Atlanta tripling its capacity and showing the largest net absorption. Despite this, vacancy rates remained low, driven by hyperscale and AI demand. Rental prices increased, albeit more moderately than in previous years. Phoenix and Atlanta are attractive due to available land and incentives but also face challenges with power supply and pending permits. In the Asia-Pacific region, inventory grew steadily. Singapore has a very low vacancy rate, and demand is increasingly shifting to secondary markets like Johor (Malaysia), which have fewer restrictions. Tokyo is a major hub for cloud and AI but struggles with land and power shortages. Hong Kong is an important gateway to China but is influenced by geopolitics. Latin America saw a significant drop in vacancy rates, especially in São Paulo and Santiago, underscoring their strategic importance. São Paulo is the largest hub in the region with competitive pricing. However, energy constraints are slowing down new projects in Querétaro and Bogotá. Santiago benefits from submarine cable connectivity but struggles with high costs and permitting processes.