Data Center Demand Skyrockets in Dallas
Data center demand in Dallas is skyrocketing, with vacant space being snapped up almost as soon as it hits the market.
The metro posted a 2.4% vacancy rate in the first half of 2025, according to research from local commercial real estate giant CBRE.
North America’s data center vacancy rate is at an all-time low of 1.6% according to CBRE’s findings, with operators clamoring for space in a highly competitive market constricted by power demands.
Low Vacancy Rates and High Demand
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Dallas, the only primary data center market in Texas according to CBRE, posted a higher vacancy rate than other leading markets like Northern Virginia, Atlanta or Phoenix.
That’s because data center technology has accelerated quickly, making previous generations of products around Dallas obsolete.
Outdated Facilities and High Power Demands
“It’s a good question — a lot of the vacancy that’s out there probably won’t get leased since it’s product that is third generation or older,” said Brant Bernet, senior vice president with CBRE.
Facilities built seven to ten years ago could be obsolete for AI uses, with server density demanding higher power and cooling demands.
“The average back then might have been somewhere around 5-7 kilowatts per rack,” said CBRE senior vice president Chris Herrmann. “Now, we’re looking at transactions that are 200kW per rack.”
Increasing Demand and Absorption Rates
Absorption for the first half of 2025 was just shy of 279 megawatts, overtaking deliveries by a hair. That’s a 575% increase in yearly absorption over the scant 41 megawatts that were absorbed in the first half of last year.
The story in Dallas-Fort Worth is similar to the rest of the country when it comes to its data center market, Hermann said: demand is being driven by a need for AI, and hyperscalers like Amazon Web Services, Microsoft Azure and Google Cloud are rapidly expanding their services to meet them.
“If someone says ‘we need 10 megawatts of space,’ it’s wherever we can find it. We prefer contiguous sites, but because of the complete lack of availability you can take whatever you can get,” Hermann said.
Accelerated Supply Growth and Power Costs
Markets with low power costs such as Atlanta, Charlotte-Raleigh, Dallas-Fort Worth, Austin and San Antonio are poised for accelerated supply growth.
The main obstacle, Bernet said, is access to power.
“We’re building as much product as the power available can handle. If there were double or triple the amount of power readily available we’d be building that amount,” he said.
Future Outlook and Pricing
Currently, there are 350 megawatts worth of data centers under construction, of which around 90% is pre-leased.
Another 1.3 gigawatts are slated to come online around the beginning of 2027, and by 2031, the market is expected to boast a total 3.7-gigawatt footprint.
CBRE expects tight demand to keep pricing elevated, at more than $200 per kilowatt.
Conclusion
In conclusion, the data center market in Dallas is experiencing a surge in demand, with low vacancy rates and high absorption rates. The main obstacle to growth is access to power, but with new construction and expansions on the horizon, the market is expected to continue to thrive.
Frequently Asked Questions
Q: What is the current vacancy rate in the Dallas data center market?
A: The current vacancy rate in the Dallas data center market is 2.4%.
Q: What is driving the demand for data centers in Dallas?
A: The demand for data centers in Dallas is being driven by the need for AI and the expansion of hyperscalers like Amazon Web Services, Microsoft Azure, and Google Cloud.
Q: What is the main obstacle to growth in the Dallas data center market?
A: The main obstacle to growth in the Dallas data center market is access to power.
Q: What is the expected pricing for data centers in Dallas?
A: CBRE expects tight demand to keep pricing elevated, at more than $200 per kilowatt.
