Dallas Data Center Boom Strains Power Grid as Demand Skyrockets
December 4, 2025
The explosive growth of cloud computing and generative AI has positioned data centers as the top asset class for commercial real estate investment and development for the third consecutive year. This surge is placing unprecedented strain on critical infrastructure, with the Dallas-Fort Worth (DFW) market emerging as a focal point of both explosive demand and a severe power supply crunch.
According to analysis from CBRE's Dallas-based data center team, the DFW market currently has approximately one gigawatt (GW) of operational colocation capacity, which is 98% leased. An additional 600 megawatts (MW) are under construction and are 95% pre-leased, poised to expand the market to 1.5 GW and solidify its position as the nation's second or third largest data center hub. The scale of this expansion is staggering; the market is on track to triple in size in just three years, matching the total capacity built over its first two decades.
However, this planned supply is dwarfed by incoming demand. CBRE executives report facing power requests totaling 40 GW, a figure that vastly exceeds available infrastructure. Brant Bernet, SVP at CBRE, contextualized this number, estimating that roughly 5 GW represents serious, immediate demand for the DFW area. This imbalance has driven the local colocation vacancy rate to a record-low 2.4%. "It's basically the most occupied asset class that we know in the history of real estate," said Chris Herrmann, SVP with CBRE.
The national market reflects similar pressures. After a brief slowdown, the third quarter of 2025 saw the largest leasing quarter in U.S. data center history. In Dallas, CBRE's annual leasing activity jumped from a historical average of 30 MW to 300 MW beginning in 2022, a trend that has continued. Phoebe Bernet, an associate at CBRE, noted that demand is so intense that groups are "swarming the spaces that are not even under construction yet."
Industry reports highlight significant headwinds beyond power. Development costs can exceed $10 million per megawatt, while lead times for grid connections are estimated between two to seven years. A finite skilled labor force and intense competition for talent between developers, hyperscalers, and utilities further constrain growth and drive up costs. Despite these challenges, capital continues to flood the sector, drawn by the fundamental demand driven by digital transformation. The Dallas market, with over 2.2 GW of additional capacity in planning phases, is expected to more than triple by 2032, ensuring the region remains at the epicenter of the industry's ongoing expansion and its accompanying infrastructure challenges.
Source: dmagazine
Dallas Data Center Boom Strains Power Grid as Demand Skyrockets
