Colliers Report Warns of Infrastructure Strains from Unprecedented Data Center Expansion
December 9, 2025
The breakneck pace of data center construction, driven by insatiable demand for artificial intelligence and cloud computing, is creating severe pressure on critical resources and threatening to constrain the industry's growth, according to a new industry report. The findings highlight a growing disconnect between the capital pouring into AI infrastructure and the physical and regulatory capacity needed to support it.
A report released by global professional services firm Colliers, titled the "2026 CRE Reset," details how record investment is failing to keep pace with demand. Technology companies are consistently reporting that demand for capacity is outstripping supply every quarter, a trend with no signs of abating into the next year. This relentless demand is colliding with significant bottlenecks, including insufficient electrical grid infrastructure, limited water resources for cooling, and a scarcity of appropriately zoned land.
These constraints are having a direct impact on market dynamics. Colliers states that preleasing activity is expected to increase, while vacancy rates will remain at near-record lows despite new supply entering the market. Furthermore, lease rates are "projected to rise as power and development costs escalate," the report notes. The challenges extend beyond simple supply and demand, however. The industry faces mounting headwinds from community opposition and supply chain limitations.
Not-in-my-backyard (NIMBY) sentiment against data centers is gaining traction, with communities increasingly pushing back on development due to environmental and aesthetic concerns, leading some projects to be abandoned. This sentiment was recently amplified when a coalition of 200 environmental groups called for a moratorium on new U.S. data center construction, citing unsustainable consumption of energy and water. Simultaneously, supply chains for key components are operating at "maximum capacity," and projects face delays from issues like U.S. tariffs on steel and aluminum, suggesting that even announced projects "may be delayed."
Financing the required expansion presents another layer of complexity. While capital is actively searching for ways to participate in the AI boom, unlocking significant investment from diverse sources like private credit and insurance, the sheer scale of required funding is a challenge. Colliers anticipates increasing commercial mortgage-backed securities (CMBS) activity in 2026 as investors become more creative in their approaches. The collective impact of these pressures indicates that the industry's historic growth phase is entering a period of heightened constraint, where success will increasingly depend on navigating power availability, community relations, and logistical hurdles as much as on technological innovation.
Source: datacenterdynamics
Colliers Report Warns of Infrastructure Strains from Unprecedented Data Center Expansion
