Data center demand “could be larger than we’re prepared for,” with vacancy entering record lows of two percent, and global AI usage surging, according to a report from Newmark.

Newmark’s 2026 Data Center Market Outlook report showed that, in a scenario where AI usage reaches levels similar to Internet or smartphone adoption, an additional 250GW of capacity would be required, far exceeding currently planned AI-data center capacity.

While conceding that this is an “aggressive but still plausible scenario,” the report argued that this prediction doesn’t even account for increases in enterprise workloads, Edge compute, or AI training, which Newmark said is forecast to grow by 3x annually through 2030.

“This scenario leaves the market in a catch-22: the binding constraint on mass AI adoption is new capacity coming online, and the binding constraint on new capacity is power,” the report said, “In the meantime, hyperscalers, developers, and their partners continue to pour capital into the buildout at an accelerating pace, considering it an ‘existential investment.’ As constraints sharpen and demand rises, the goalposts for spending continue to move higher.”

Various firms and organizations have tried to put an estimate on the amount of investment required to meet rapidly growing data center demand, with some suggesting staggering sums of up to $3 trillion over the next five years.

Last year, data center investment topped $580 billion and beat investment in new oil supply for the first time.

And in 2026, hyperscalers alone are expected to spend $700bn to meet their data center commitments.

Halo effect

Newmark’s report also examined the boosted demand for core industrial real estate driven by the level of spending on data center construction, termed the “halo effect.”

Spending on data center construction is now up by nearly 400 percent since 2020, significantly boosting demand for warehouses, industrial outdoor storage, and manufacturing facilities.

Using Texas as an example, Newmark predicted the state alone could require more than 24 million square ft (2.22 million sqm) of industrial space, just accounting for current projects in the construction pipeline.

The report revealed that Texas’s 337 existing data centers generate an average of 531,000 sq ft (49,331 sqm) of supportive industrial occupancy. Newmark said data center-related industrial leasing in the state had grown to nearly 14 million square ft (1.3 million sqm) in 2025, more than double figures from five years ago.

Current projects in the Texas pipeline could generate a further 24 million sq ft (2.2 million sqm) of industrial space needs, with proposed projects requiring another 14 million.

This proposed pipeline would have the biggest impact on the Dallas-Fort Worth area, which currently accounts for nearly half of the upcoming data center projects in Texas.

Texas could become the largest data center market in the world by 2030, according to some reports, overtaking Virginia as the primary hub of the US.

The Lone Star State currently accounts for 6.5GW of a total of 35GW in data center capacity under construction in the US.