Data center demand for computing facilities that can consume as much power as entire cities, but America's electrical grid is struggling to keep pace.
Photo by Eli Hiller/For The Washington Post via Getty Images
Data centers are growing faster and bigger than ever as artificial intelligence drives demand for computing facilities that can consume as much power as entire cities, but America's electrical grid is struggling to keep pace with the breakneck expansion.
Power constraints have emerged as the single biggest bottleneck to building our AI future, according to a new report by JLL that found data center vacancy rates have plummeted to a record low 2.3%. The surge in demand has created an unprecedented mismatch between what companies need and what's actually available.
The scale of demand has exploded beyond what the industry has ever seen. Just a few years ago, most data centers needed 200 to 300 megawatts on roughly 300 acres. Now, Andy Cvengros, the executive managing director and co-lead of JLL's US data center markets team, said hyperscalers are requesting sites with 1,000 acres and multiple gigawatts of power.
"The amount of power being requested is like all of New York's power in one single site," Cvengros said.
The surge is creating chaos in utility planning, with speculative developers flooding the system with requests they hope to flip for profit. In Chicago alone, utilities are seeing 40 gigawatts of power requests, roughly 40 times the city's entire existing data center capacity. Cvengros estimates that 90% of those requests aren't real, but the flood of applications is overwhelming utility systems and creating years-long backlogs for legitimate projects.
Where real demand does exist, it's heavily concentrated. The report shows that 50% of new demand in the first half of 2025 was concentrated in just two markets: Northern Virginia and Dallas. With so little space available, companies are now forced to reserve capacity in data centers that haven't even been built yet, sometimes waiting over a year for construction to finish before they can actually use the space.
The financial stakes are enormous. JLL estimates that North America could see $1 trillion in data center development between 2025 and 2030, with more than 100 gigawatts of capacity potentially breaking ground. The construction pipeline of 8 gigawatts is already 73% preleased, a rate that JLL says signals that vacancy will remain restrictive for years.
The constraints come as the industry grapples with questions about whether the AI buildout is sustainable. OpenAI CEO Sam Altman recently admitted that we're in the midst of an AI bubble, though he still plans to spend "trillions" on data center construction. Meanwhile, Morgan Stanley $MS estimates the industry needs $3 trillion in global investment by 2028, raising concerns about whether the massive spending can generate returns before the infrastructure becomes obsolete.
But the power crunch is driving up costs and forcing companies to get creative. U.S. commercial electricity rates have increased nearly 30% over the last five years as utilities address aging infrastructure and record demand. In response, 75% of development activity is now concentrated in low-cost electricity markets.
The report also shows companies are increasingly turning to alternative energy solutions, including natural gas turbines on-site and partnerships with fuel cell companies. Critical equipment like transformers now have four-to-five-year lead times, creating another bottleneck in an already constrained system.
Meanwhile, the demand side keeps growing. Traditional enterprise customers like banks, trading firms, and healthcare companies are also launching their own AI programs, adding pressure to the grid and data center market in every direction.
"You're squeezing the toothpaste from both ends," Cvengros said.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
