Record data center growth is fueling pressures in power, water, and zoning availability, as AI and cloud computing force record investment in the industry, a report from professional services firm Colliers has found.

While capital investment in AI infrastructure is rising rapidly, demand is continuing to outpace supply with companies reporting significant capacity shortages, according to Colliers’ 2026 CRE Reset report.

This is causing a host of issues, with insufficient power infrastructure and zoning availability to meet demand.

As a result, preleasing is expected to rise, and vacancies will remain at near record lows, even with new supply coming online. Colliers said lease rates are “projected to rise as power and development costs escalate.”

The data center sector is facing critical issues in securing capacity as a result of the massive planned expansion. According to Colliers, technology companies are reporting that demand is outpacing capacity every quarter, with no sign of a slowdown. This is expected to continue into 2026.

And despite a constant stream of new data center project announcements, significant blockers are preventing the rapid buildout that is required to meet demand. From critical supply chain issues, grid limitations, and community resistance, projects are facing delays, and sometimes even cancellation.

Colliers’ report said that not-in-my-backyard (NIMBY) sentiment against data centers is gaining traction, and communities are pushing back on data center development, causing projects to be abandoned.

There is also significant opposition to data center construction from an environmental standpoint. This week, a coalition of 200 environmental groups called for a moratorium on data center construction, citing the “massive and unsustainable consumption by data centers of energy and water resources, and skyrocketing utility costs for families and small businesses.”

Meanwhile, supply chains are running at "maximum capacity,” with delays in sourcing key components. US construction is firmly prioritizing data centers, but there are significant supply chain issues slowing rapid rollout, not in the least the US’ tariffs on steel and aluminum.

Colliers said this suggests projects “may be delayed,” even though more projects will be announced in 2026.

And though the industry is seeing record investment, finding capital to fund the required data center expansion is in itself a challenge.

“Capital is searching for ways to play the AI boom, unlocking significant investment from private credit, infrastructure, banking, insurance, private equity, and public markets. Investors are becoming increasingly nimble and creative. Watch for increasing commercial mortgage-backed securities (CMBS) activity in 2026,” the report said.