Texas is poised to become the world’s largest data center market by 2030, overtaking Virginia, according to a new report from JLL.

“Frontier markets” such as Texas, Tennessee, Wisconsin, and Ohio are experiencing “explosive” growth, JLL’s North America Data Center Report Year-end 2025 said.

JLL defines frontier markets as those outside of traditional mature hubs like Northern Virginia, Dallas-Fort Worth, and Silicon Valley.

Nearly two-thirds (64 percent) of all US data center construction is happening in these markets, driven by developers seeking power availability and business-friendly environments.

More than 35GW of data center capacity is under construction in North America, with Texas alone accounting for 6.5GW of this.

Texas has been home to a slew of data center project announcements over the past few years. It is home to the first of OpenAI’s Stargate data centers.

In the other mentioned frontier markets, JLL said it is tracking more than 10 projects of 1GW or more under construction. The report said this threshold would have been “eye-opening” a few years ago.

Record-low vacancies

Of the more than 35GW construction pipeline, nearly 60 percent is leased, with the remaining 40 percent owner-occupied by hyperscalers.

Despite record-breaking construction, vacancy remained at a record low of one percent for the second year in a row. JLL said this statistic “challenges bubble concerns” and reflects “sustained structural demand rather than cyclical imbalance.” The concern of a data center overbuild was similarly dismissed as being limited by “constrained availability.”

“Bubble concerns are difficult to reconcile with 99 percent sector occupancy, particularly given that the largest data center tenants rank among the most profitable and highest-rated companies globally,” the report said.

Andy Cvengros, executive managing director and co-lead of US Data Center Markets at JLL, said: “The data center sector has officially entered hyperdrive. Record-low vacancy sustained over two consecutive years provides compelling evidence against bubble concerns, especially when nearly all our massive construction pipeline is already pre-committed by investment-grade tenants.”

“This structural change is driven by hyperscale and AI demand and development headwinds that will likely keep vacancy near zero for the next several years.”

Capital markets and hyperscale capex

JLL said data center capital markets have evolved, positioning data centers as one of commercial real estate’s “most dynamic sectors.” This maturation is evidenced by increased sophistication through complex transaction structure, most obviously shown by the near $30 billion private capital joint venture between Blue Owl and Meta, and the $40bn Aligned Data Centers acquisition.

The volume of asset-backed securities almost doubled in 2025, reaching $17bn. Single-asset single-borrow lending volume also increased by a factor of three to over $11bn.

Hyperscalers are also driving a surge in investment in the industry in 2026, with the top five responsible for $710bn in planned capex for the year.

JLL said these commitments were “setting the pace” for the industry, but conceded that this unprecedented demand is struggling to be met due to significant infrastructure constraints, forcing companies to secure capacity years in advance and driving expansion to the aforementioned frontier markets.

“Developers that collaborate with utilities on innovative solutions, such as flexible load profiles, phased power requirements or backup generation, can often expedite their grid connections,” said Matt Landek, global division president, Data Centers and Critical Environments at JLL.

“The industry is rapidly adopting interim power strategies as companies work to close the gap between immediate capacity needs and grid infrastructure timelines. Major hyperscalers and leading operators have achieved carbon-neutral data center operations through comprehensive renewable energy procurement, demonstrating how sustainability mandates increasingly drive location decisions, facility design, and operational strategies.”