INTRODUCTION
The rapid expansion of cloud computing and artificial intelligence is driving one of the largest digital infrastructure investment cycles in modern economic history. As hyperscale technology companies accelerate capital expenditures to support growing compute demand, the US data center market is experiencing historically tight supply conditions, rapid geographic expansion, and increasing institutional investor interest.
- Hyperscale capital expenditures are projected to reach approximately $660 billion in 2026, nearly tripling in just two years, supported by continued growth in cloud revenues and accelerating enterprise AI adoption.
- US data center demand has accelerated dramatically, with net absorption increasing from 6.4 gigawatts (GW) in 2023 to 16.9 GW in 2025, while first quarter 2026 leasing activity reached a record 9.5 GW.
- Power availability has become the primary constraint on new development, reshaping the geography of the sector as hyperscale operators increasingly expand beyond traditional primary markets into frontier markets o ering scalable power, land, and fiber connectivity.
- Supply remains exceptionally constrained despite record construction activity. As of Q1 2026, approximately 25.7 GW was under construction in the US, with roughly 93% of capacity already pre-leased prior to delivery.
- Historically low vacancy rates and constrained power availability have driven substantial rental growth and strengthened owner economics, while growing institutional capital flows into digital infrastructure continue to support liquidity and long-term demand for stabilized data center assets.
