If your organization needs 1 to 3 megawatts of colocation capacity in a major U.S. market right now, you are not competing with other enterprises anymore. You are competing with hyperscalers signing 245-megawatt, 15-year leases and neoclouds buying out entire buildings before they’re even built. According to JLL’s midyear 2026 North America data center report, the market absorbed a record 25 gigawatts of capacity in just the first six months of the year — double the pace of 2025 and five times the level from two years earlier. Vacancy has held near 1% for three straight years. For a hyperscaler with a nine-figure budget and a multi-year roadmap, that’s a tight market. For an enterprise buyer trying to secure 1.5 MW for a hybrid cloud deployment, it’s starting to look like no market at all.
The capacity is there — it’s just already spoken for
The headline numbers suggest abundance: 66 gigawatts under construction across North America, according to JLL, with Texas alone accounting for 26 GW of existing and in-progress capacity and Virginia adding another 13 GW. But 95% of that pipeline is already pre-committed. Developers aren’t building speculative capacity and hoping tenants show up — they’re building to contracts signed years in advance. JLL notes that tenants securing space today are, in many cases, contracting for 2028 deliveries. CBRE’s data tells a similar story from the supply side: North American primary-market colocation vacancy fell to a record 1.6% in the first half of 2025, down from 2.8% a year earlier, with nearly three-quarters of the 5,242 MW under development across the region already pre-leased.
What’s missing from those aggregate numbers is who is actually signing those pre-commitments. JLL’s breakdown of 2026 tenant demand puts hyperscalers at 59%, neoclouds at 11%, and pure-play AI companies at 7% — a combined 77% of absorption going to three categories of buyer that either self-build at gigawatt scale or sign wholesale leases measured in hundreds of megawatts. The remainder is split among everyone else, including the enterprise segment that used to be colocation’s bread and butter.
Where that leaves the 1 to 3 megawatt buyer
JLL is explicit about who’s getting squeezed: enterprise users managing hybrid cloud portfolios, whose typical capacity requirements run from 500 kilowatts to 3 megawatts, are struggling to secure space as they compete directly with hyperscale deployments for the same constrained power and land. This isn’t a pricing problem that money alone solves — it’s a queue problem. When a developer can fill an entire 200 MW campus with one hyperscaler signature instead of negotiating forty separate 2-5 MW deals with forty separate enterprise customers, the economics of sales effort push capacity toward the larger, simpler deal every time.
Andrew Baffoe, Director of Cloud and Network Services at Myriad360, frames the shift bluntly: conversations with providers now center on how many megawatts can be delivered, when, and at what price per kilowatt — not on rack count or connectivity options. “If you can find power, they will come,” he said. Everett Thompson, CEO of Wired Real Estate Group, goes further, arguing the colocation market is effectively splitting into two separate businesses with little overlap: AI-driven, power-dense wholesale facilities on one side, and low-latency connectivity-focused facilities on the other. Mid-size enterprise buyers increasingly don’t fit cleanly into either category, and that’s exactly the problem — they need enough power to matter but not enough to get priority routing from a developer’s leasing team.
This dynamic compounds something TechInfraHub has covered on the supply side: when national vacancy sits near 1%, the shortage isn’t evenly distributed. It concentrates hardest on the buyers who can’t offer a developer the scale or deal certainty that justifies prioritizing them over a hyperscale anchor tenant.
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📞 Book a Discovery CallWhat it’s actually costing buyers who do find space
Pricing data shows the squeeze isn’t just about availability — it’s about what you pay even when you find a slot. JLL reports that data center rents have risen nearly 70% since 2020, averaging roughly 9% annual growth, with pricing momentum expected to hold through 2030. CBRE’s figures sharpen the picture further: average rates for 250-500 kW deployments reached $184 per kW per month in the first half of 2025, while requirements of 10 MW or more saw pricing increases of up to 19% in the same period — the larger deals are inflating fastest because that’s where demand is most intense.
It isn’t only rent. Peter Feldman, CEO of QTD Systems, notes that non-AI colocation sales have stayed relatively steady in volume, but rising power costs have offset most of the pricing gains providers might otherwise book, with equipment costs he describes as having “skyrocketed due to tariffs.” Christina Qi, CEO of data infrastructure firm Databento, has pointed to memory and storage shortages and higher component costs persisting well into 2026, with knock-on effects for server shipment timelines that extend deployment schedules regardless of how fast a lease gets signed. For a mid-size buyer, that means the capacity search and the cost-planning problem are now the same problem: a slower, pricier process on both ends.
Where the openings still exist
The squeeze is real but not universal. JLL’s regional data shows meaningful absorption and new supply outside the primary hyperscale corridors: Atlanta absorbed a record 918 MW in six months, Austin/San Antonio completed 1.7 GW with 796 MW absorbed, and Phoenix absorbed 442 MW with another 1.7 GW under construction. JLL’s broader framing is that frontier markets — including West Texas, Ohio, Louisiana, and the Carolinas — now account for 77% of capacity under development nationally, a deliberate move by developers and buyers alike toward power-advantaged secondary and tertiary regions rather than saturated primary markets like Northern Virginia, where vacancy sits below 1% in the world’s largest single data center market.
Thompson’s read on this shift is specific: “Energy resources, not immediate proximity to an urban core, are now the primary site-selection driver.” That’s a real opening for enterprise buyers willing to relax latency requirements. A mid-size deployment that doesn’t need to sit inside the Northern Virginia or Silicon Valley core has meaningfully better odds in a frontier market where developers are actively diversifying their tenant mix rather than filling every slot with a single hyperscale anchor. TechInfraHub’s recent look at time-to-power as the real 2026 site-selection metric applies just as directly to enterprise buyers as it does to larger deployments — arguably more so, since smaller buyers have less leverage to jump a queue once they’re in it.
The buyer’s takeaway
If your capacity requirement falls in that 1 to 3 megawatt range, the market has quietly reclassified you as a lower leasing priority at exactly the moment demand is at a record high. The practical response isn’t to wait for conditions to ease — JLL expects vacancy to stay near zero through 2028, and 95% of the current construction pipeline is already committed. Instead, treat capacity sourcing as a 2028-delivery problem today, the same way hyperscalers do: engage providers who explicitly serve the mid-market rather than treating it as overflow, look seriously at frontier and secondary markets where developers still need diverse tenant mixes to de-risk a build, and lock in pricing and power commitments as early as possible, since the 9% annual rent growth JLL is tracking doesn’t pause for smaller deals. The buyers who treat this as a long lead-time infrastructure decision, not a quarterly real estate transaction, are the ones who’ll actually have a facility by the time they need one. For a structured way to work through build, buy, or colocate decisions under exactly these constraints, see the TechInfraHub Data Center Buyer’s Toolkit.
Written by
Raajeev Ratra
Data Center Infrastructure Expert | 15+ Years in DC Design, Operations & Project Management
Raajeev is a seasoned data center professional with hands-on experience in hyperscale facilities, colocation design, power & cooling infrastructure, and global DC operations. He shares practical insights to help engineers and IT leaders build better infrastructure.