US data center colocation inventory climbed to 29.0 gigawatts in the first quarter of 2026, a 22 percent increase quarter over quarter and a 48 percent jump year over year, according to Avison Young market data. The surge reflects an unprecedented pace of construction as operators race to add AI-ready capacity.

Demand kept ahead of that new supply. Net absorption reached 5.29 gigawatts in the first quarter, led by Austin and Dallas-Fort Worth, which pushed vacancy down to a historically tight 1.2 percent. The prelease rate for US colocation stood at 81.5 percent, meaning more than four of every five megawatts under construction were already committed to a tenant before completion.

Growth was concentrated in a handful of markets. Austin posted the strongest inventory expansion with 1,909 megawatts added, followed by Dallas-Fort Worth at 914 megawatts, Atlanta at 683 megawatts, and Chicago at 526 megawatts. Atlanta's ranking among the top four underscores the Southeast's growing weight in the national market.

Investment projections match the physical growth. The US colocation market is expected to attract nearly $462 billion in cumulative investment between 2026 and 2031, with the market projected to reach $85.18 billion by 2031 at a compound annual growth rate near 11.76 percent. Colocation is leading expansion at 19 percent while on-premises capacity declines about 6 percent as enterprises continue migrating to cloud and shared facilities.

Source: Avison Young - https://www.avisonyoung.us/us-data-center-market-overview