Data Centers on the Move: Why Texas Is Set to Lead

The surge in data center construction across North America has pushed the industry beyond its long‑established hubs. A new study shows that about two‑thirds of the 35 gigawatts of planned capacity lies outside traditional strongholds such as Virginia, which has long dominated the market. Texas is poised to overtake Virginia as the top destination for data infrastructure, marking a turning point in the sector’s growth. Vacancy rates remain historically low. By the end of 2025, only one percent of data center space is expected to be empty for a second year running. This steady demand, coupled with the fact that 92 percent of new projects are already committed by reputable tenants, suggests that empty units will stay scarce at least until 2030. Large cloud operators and artificial‑intelligence firms are the main drivers of this boom. The five biggest players plan to spend $710 billion on new facilities in 2026 alone. Lenders are eager, having provided a record $75 billion in financing last year.Investors like Nuveen are adopting a quick‑turn strategy, building and selling projects to stay ahead of market shifts. They see strong demand now but anticipate rapid changes that could make long‑term holdings riskier. Power supply remains a critical hurdle. Connecting to the grid can take four years or more, forcing tenants to lock in capacity well ahead of time. This challenge is pushing developers toward locations with ample power availability, and some companies are even considering on‑site generators to mitigate risk. Nonetheless, most operators still prefer long‑term grid connections. The data center landscape is in motion. With new projects sprouting beyond familiar regions and demand driven by tech giants, the industry is moving faster than ever while navigating power constraints and financing dynamics.