Texas Poised to Overtake Virginia as America’s Data Center Development Capital

Move aside, Virginia. It looks like Texas will soon overtake you as the official U.S. data center HQ. 

A 2025 data center report from JLL found that Texas is likely to overtake Virginia as the largest U.S. data center market by 2030, as the Lone Star State has nearly as many existing gigawatts of data center power development. Texas presently has 6.5 GW of data centers under development, a substantially larger pipeline than in Virginia. 

All told, North America currently has 35 GW of data center capacity under development — roughly the amount of electricity required to power the United Kingdom — and 64 percent of that capacity resides in emerging markets such as Texas, Tennessee, Wisconsin and Ohio. 

JLL’s Curt Holcomb, managing director with JLL’s global data center solutions practice team, told Commercial Observer that frontier markets in Texas and other states across the Midwest have attracted data center hyperscalers due to their abundant energy resources (which include coal, electricity and natural gas), business-friendly political climate, and enormous amount of available land on which data centers can be built. 

“This is really all about chasing power capacity,” Holcomb said. “The main reason why you see markets that might have been secondary markets in the past now come to the forefront is because the power capacity is available there, they have plenty of land, and the hyperscalers are recognizing this.” 

National data center development kept growing in 2025 behind record-low vacancies and more than $700 billion of planned capital expenditures from the largest hyperscalers, according to JLL. 

U.S. data center vacancy sat at 1 percent for the second consecutive year in 2025, and 92 percent of the 35 GWs presently under construction are already spoken for. Those numbers suggest vacancies will likely remain in the low single digits through at least the end of the decade. 

Holcomb suggested that, because data centers take so long to develop, the market is currently saturated with new developments that are largely pre-leased, while projects that have not secured leasing agreements are deliberately holding themselves off the market, often for years at a time, to secure higher rents closer to the completion of construction.

JLL found that North America data center lease rates have increased 60 percent since 2020. 

“Why cut a deal now, when you can wait three to six months, pre-lease it, but just do that closer to delivery, and get a higher rate?” said Holcomb.   

But it’s the insatiable demand from hyperscalers — firms such as Google, Microsoft, Meta, Amazon, Oracle and OpenAI — who account for 65 percent of all data center demand in North America, that are truly powering the boom of the asset class. 

The five largest U.S. hyperscalers have announced $710 billion of capital expenditures into data centers in 2026, with Open AI and Anthropic set to develop together at least 10 GW of data center power capacity, per JLL.  

“And a lot of that is being driven by new AI applications, but it also includes the traditional cloud business [for corporations and individual users],” said Holcomb. “It is primarily the hyperscalers who are driving demand, but filling in really nicely behind them are the enterprise users [e.g. Fortune 500 companies].”

On the capital markets side, the financial metrics continue to favor the industry. Data center debt origination reached $75 billion in 2025, a record volume, and substantially more than the $69 billion in originations the asset class secured in 2024, or the $45 billion secured in 2023. 

All told, data center originations have increased 70 percent on an annual basis since 2020.   

“It used to be niche investors that might have been private equity backed, or a venture fund, but over the last three to four years that’s turned into the traditional large institutional investors,” explained Holcomb. “They’re all looking at this as a huge opportunity, and, as we all know, there’s a lot of money that’s lying around to invest in real estate.” 

Brian Pascus can be reached at bpascus@commercialobserver.com.