Data Center Deal Flow Doubles in a Year to $57B

America’s fastest-growing asset class doubled its deal volume in 2024, and is expected to see even more activity in the years ahead as power demands, low supply and emerging secondary markets have made data centers an increasingly important asset class to the private equity investment landscape. 

This week Colliers (CIGI) published its 2025 Data Center Marketplace report that examined the state of the asset class in the U.S. and how it is expected to evolve over the next five years. The metrics paint a stunning picture. Data centers saw $57 billion of deal volume in 2024, with an additional $29 billion in deal volume still pending. This more than doubled the $26 billion in deal volume closed in 2023, according to Synergy Research Group. 

“A lack of available product has accelerated new development, with larger, more complex builds attracting record amounts of capital,” wrote Colliers. “This massive capital requirement has prompted major real estate investors and private equity firms to join forces with operators, hyperscalers, and other strategic technology companies to capitalize on the industry’s growth potential.”

Between 2024 and 2028, global investment in new data center capacity will reach $2.2 trillion, or average $443 billion annually, according to Moody’s Ratings.

The No. 1 theme for the asset class for 2025 is the insatiable power demands that data centers require. Unlike traditional real estate, which focuses on square footage to determine rents, data center economics are defined by power usage — either gigawatts, kilowatts or megawatts — with rents calculated off the power supply agreements sponsors and operators make with utility companies.  (A watt is a unit of power, with 1,000 kilowatts (KW) equaling 1 megawatt, and 1,000 megawatts (MW) equaling one gigawatt (GW).)

The U.S. data center market is expected to grow 17 percent annually, as national energy usage from the asset class will increase from 33 GW to 100 GW between 2023 and 2030, per Citi Research. 

The Colliers report cited Goldman Sachs data, which determined that by 2030 data center power demand is projected to grow by at least 160 percent. This power demand will come out of tertiary markets like Columbus, Ohio, and Reno, Nev., as established markets like Northern Virginia, Dallas and Chicago have already largely reached their power demand capacities. 

Moreover, third-party operators of data centers in North America saw their supply loads increase more than 40 percent in the last year, rising from 12.4 GW in 2023 to over 18 GW in 2024. 

“Navigating infrastructure demands, securing power resources, and making timely, decisive commitments are critical in this high-stakes environment,” said the Colliers report. “The coming years will test the industry’s adaptability as technological advancements, power constraints, and evolving demand patterns continue to shape the landscape.” 

The second most important theme in the asset class is the basic lack of vacancy to lease, coupled with the power demands on established cities. This has created a need for capital to build new data center hubs in previously unfamiliar markets. 

The supply crisis is real, despite billions of dollars in investment. By 2030, the U.S. could face a data center supply deficit of more than 15 GW nationally, according to McKinsey.

For example, Colliers found that Northern Virginia pre-leased 1.4 GW of its 1.5 GW of data center absorption in 2024, and that 70 percent of all new national data center product was pre-leased, driving the national vacancy average to a mere 2 percent. 

According to Colliers, Northern Virginia has a market size of 5,350 MW, and a vacancy rate of just 0.26 percent. Atlanta’s market size is 2,010 MW, and its vacancy is 0.63 percent. The Dallas, Chicago, and Phoenix markets all hold vacancies under 2 percent.   

“The rapid growth of AI workloads has dramatically amplified power issues, as AI consumes substantially more power per rack than traditional workloads, putting pressure on an already limited infrastructure,” the Colliers report said. “With power availability becoming the primary limiting factor in traditional markets, new markets are emerging, often near established ecosystems that embrace development.”

The locales are novel for data centers. Reno added 400 MW of capacity in the last year and has at least 2 GW of capacity planned for development over the next three years. Cheyenne, Wyo., is the site of an $800 million, 960-acre project that is quarterbacked by Meta, which is also building a 715,000-square-foot, $800 million data center in Montgomery, Ala. And Dallas is poised to become the second-largest data center marketplace in the U.S. by the end of the decade. 

“This geographic diversification could reshape the industry by creating new tech hubs, altering the talent landscape, and fostering innovation in previously overlooked regions,” wrote Colliers. 

But as markets grow and power demand is pushed to its limits, the capital markets system must find new ways to integrate the biggest players in private equity with the established data center operators. To this end, mergers and acquisitions helped define the national data center space in 2024. 

Last year, Blue Owl Partners acquired IPI, and its $10.5 billion data center portfolio, in a $1 billion take private deal; Cerberus Capital Management supplied $200 million in acquisition funding for Prime Data Centers to play with; Equinix announced a plan to form a $15 billion joint venture with GIC and the Canada Pension Plan Investment Board; while Blue Owl formed a $5 billion joint venture with Chirisa Technology Parks and PowerHouse Data Centers to deploy capital across the asset class.  

“The number of institutional lenders that are newly interested in financing data centers has grown significantly,” said Colliers Managing Director Dylan Kane, who cited favorable supply and demand fundamentals and asset class diversification as the driving factors behind the capital movement. 

“This recent surge in demand and a welcomed shift in monetary policy will allow the strong market momentum for debt capital to continue in 2025,” Kane added.  

Brian Pascus can be reached at bpascus@commercialobserver.com