Understanding Data Center Trends 2025

In 2025, data centers will face rising rental rates and mounting energy challenges, forcing operators to seek alternative power sources. While hyperscale growth continues, efficiency breakthroughs like DeepSeek are optimizing data center performance and reshaping infrastructure needs.

Rising Rental Rates Push Data Center Growth into Secondary Markets
Rental rates for data centers are expected to climb in 2025 as demand continues to exceed supply. Developers are passing rising construction and operational costs onto tenants, driving lease prices higher. CBRE projects preleasing rates will surpass 90%, meaning most new capacity will be committed before construction is complete. Much of this new space is already preleased to cloud giants like Microsoft, Google, AWS, Meta, and Oracle, limiting availability for smaller tenants. With vacancy rates at a record low of 2.8% and power constraints affecting key markets, securing affordable space is becoming more difficult, prompting businesses to rethink expansion plans and location strategies.

As costs rise in primary markets, operators are turning to secondary regions for expansion. These markets offer lower land costs, better power availability, and regulatory benefits, making them attractive for large-scale projects. Hyperscale providers are also shifting toward these markets, with Meta planning a $10 billion data center campus in Richland Parish, Louisiana, signaling a growing trend of investments outside major hubs. Meanwhile, developers are increasing colocation capacity to serve small and mid-sized tenants, who typically pay higher rates per kilowatt. Moody’s expects a temporary rise in vacancy rates as new colocation space enters the market, but overall supply constraints will keep rental prices high.