Despite ongoing hyperscaler infrastructure investments and record compute demand, construction declined for the first time since 2020, CBRE research found.
Dive Brief:
- The North American data center building boom showed signs of a slowdown for the first time in six years during the second half of 2025, according to CBRE research. Despite an ongoing surge in hyperscaler infrastructure spending, capacity under construction fell nearly 6% year over year, the analyst firm found.
- Most key indicators showed record demand for AI and cloud computing services, as the data center vacancy rate hit a historic low of 1.4% despite supply increasing 36% across markets, per CBRE’s analysis.
- While the PC and server industries began grappling with memory and storage chip shortages, data center expansions were constrained by several other structural factors, Gordon Dolven, CBRE data center research director, told Channel Dive. “Power and electrical equipment is still the main driver of construction delays,” he said. “If a new site requires upgrading an existing transmission line, a brand-new transmission line, new generation brought to the grid, it can impact timelines drastically.”
Dive Insight:
The timing of construction falloffs paralleled chip shortages, coalescing during the final three months of the year. U.S. data center construction added 25 gigawatts in the fourth quarter, a 50% decrease compared with Q3, according to research firm Wood Mackenzie.
The industry nevertheless enjoyed a banner year, buoyed by hundreds of millions of dollars in investment from hyperscalers. U.S. data center project capacity more than doubled year over year, reaching 241 gigawatts, one-third of which remained under active development, Wood Mackenzie’s analysis found.
“Developers shifted to focusing on the existing pipeline at the end of last year as opposed to new projects, as load queue constraints weighed on the market,” Ben Hertz-Shargel, global head of grid edge for Wood Mackenzie, said in a release accompanying the report.
Massive capital investments fueled the ongoing frenzy, even as construction stalled. Global data center capex grew 57% year over year in 2025, surpassing $700 billion on its way to crossing the trillion-dollar threshold this year, according to a Dell’Oro Group analysis published Tuesday.
Spending remained top heavy, Baron Fung, Dell’Oro Group senior research director, said in the report. Four U.S. companies —Amazon, Google, Meta and Microsoft — increased data center capex by 76% and Oracle investments more than tripled, he said.
Amazon alone pledged to double its capital spending from roughly $100 billion in 2025 to $200 billion this year, CEO Andy Jassy said during a February earnings call. Google wasn’t far behind, signaling it would more than double its capex this year to $185 billion.
Microsoft, which reported earnings in January mid-fiscal year 2026, tallied $37.5 billion in capex during the final three months of last year. Two-thirds of the investment went into short-lived assets, primarily GPUs and CPUs, CEO Satya Nadella said during an earnings call.
“This heightened level of investment raises the potential for overcapacity in AI infrastructure, although hyperscalers are taking proactive measures to mitigate risks and optimize costs,” Fung said.