Data Center Construction Boom: 10 GW of New Capacity Set for 2025

The global data center industry is poised for significant growth in 2025, with an estimated 10 GW of capacity expected to break ground across the hyperscale and colocation segments, according to JLL’s 2025 Global Data Center Outlook.

Global data center capacity is expected to grow at an average of 15% annually through 2027, JLL said. According to the report, 7 GW of projects worldwide are projected to reach completion in 2025, including 3.3 GW in North America.

As the sector expands, the focus is shifting to critical power transmission challenges, particularly in regions facing electricity constraints.

The report highlighted the significant impact of artificial intelligence (AI) on data center design and efficiency, with the increasing adoption of AI already resulting in higher energy demands.

Andy Cvengros, co-lead of US data center markets at JLL, told Data Center Knowledge the company is seeing a lot of continued growth in secondary markets, including Richmond in Virginia, south Dallas, west Chicago, Atlanta, Ohio, northern Indiana, and others.

“This is driven by power and land availability at a lower cost basis than the core markets,” he said.

Sustainable Data Center Energy Sources

Published today (January 13), JLL’s latest data center report also examines the role of alternative energy sources, such as large-scale nuclear and small modular reactors (SMRs), in addressing power grid limitations.

Related:Land Barriers: How Zoning Regulations Could Stall Data Center Industry Expansion

Energy efficiency is another key area of focus, with innovations like liquid cooling reshaping data center infrastructure to meet sustainability goals.

Cvengros pointed to growth prospects around small modular reactors (SMRs), which offer a more scalable and modular approach to green power, although deployment of this technology is still in the early stages.

“SMRs are exciting for the industry however they are expected to come with challenges including regulatory pushback at the federal, state, and local levels,” he said. “It would be naïve to think that the residents of your local town would broadly favor a nuclear reactor, no matter how safe being located near their home.”

Cvengros explained that zoning codes and ordinances will need to be updated to accommodate this type of use.

“Public perception of nuclear risks will need to be contended as well,” Cyengros said. “SMRs are likely to be for big AI developments located in rural areas.”

2025 Data Center Investment Outlook

The report also noted the robust investment climate, anticipating another record year for data center development financing in 2025 as demand for digital infrastructure continues to surge.

Related:Financing for New Data Center Construction: An In-Depth Guide

“Data center activity has exploded over the last few years, with much of the demand geared toward single-tenant ground-up construction,” JLL Capital Markets US data center leader Carl Beardsley said in a statement.

He added significant barriers to entry exist for new investors based on the amount of capital required as well as a longer development cycle.

Read more of the latest data center build and design news

The report also noted that while M&A activity may slow in 2025, there will likely be a rise in joint ventures in developing countries as firms partner with regional groups to navigate local regulatory and business challenges.

“In 2025, we expect many opportunities for core investors to recapitalize the single-tenant data centers that continue to be built,” Beardsley said.