The U.S. market for companies that rent space in shared data centers is expected to grow to $85 billion by 2031, fueled by nearly $462 billion in cumulative investments, according to an analysis released Wednesday by industry research firm Arizton.
The report says the rapid adoption of generative AI, enterprise cloud migration, and data-intensive digital applications is fundamentally reshaping demand in the U.S. market. A colocation data center is a building where businesses rent space, power, and internet connections for their computer servers instead of building their own.
Arizton forecasts the U.S. market for renting space in large-scale shared data centers to grow at an average annual rate of nearly 12% through 2031.
The report forecasts that total investments in AI data centers, which include the costs of developing and expanding data center infrastructure, including land, construction, power systems, cooling, servers, and related facilities, will reach nearly $462 billion by 2031.
Nearly $128 billion of the total $462 billion investment—about 28%—is expected to happen in the Southeast, making it the country's largest growth region. By 2031, the Southeast is projected to add enough new power capacity to support thousands of megawatts of additional data center operations, reinforcing its position as one of the nation's fastest-growing regions.
The cost of constructing a data center in the U.S. can range from $9 million to $14 million per megawatt (MW), depending on the location. These high costs are influenced by several factors, including limited land availability, elevated labor rates, inflation, and access to power.
Northern Virginia remains the country's largest data center market, while Texas and Arizona account for most of the investment in the Southwest. In the New York–New Jersey region, demand for data center space remains strong, with 94% of available space occupied.
