Data Center Market Update – September 2026

September 9, 2026

Data Center Market Update - KPI Sept 2026

Data Center Market Update: Demand Remains Strong as Power, Capital and Credit Shape the Next Phase of Growth

The data center sector continues to distinguish itself as one of the fastest-growing areas of CRE. Fueled by AI infrastructure investment, cloud computing and hyperscale demand, development activity has accelerated again in 2026, and capital is following.

Capright’s Data Center Market Update examines the latest trends shaping data center investment, development, valuation and capital markets, from record absorption and expanding development pipelines to hyperscaler credit risk and a growing market for data center acquisitions.

Data Center Demand Shows Little Sign of Slowing

After a brief moderation in construction activity in late 2025, the data center market rebounded sharply in 2026. U.S. data center construction spending reached $75B in July 2026, up 57% from the prior year.

Demand has been equally notable. North American data center absorption reached a record 25 GW during 1H26, more than double the prior-year pace and five times the level recorded two years earlier. Vacancy across major markets remains below 2%, with much of the new capacity pre-leased before completion.

Northern Virginia remains the industry’s largest market at nearly 7 GW of inventory, but development is increasingly expanding into markets such as West Texas, Ohio and the Carolinas, where access to power can offer an advantage.

Development Investment Accelerates

The scale of the data center development pipeline illustrates how quickly the sector has expanded.

Among the three largest data center REITs, planned investment for expansion and new development in the Americas increased from just $1.5B in 3Q21 to $21.5B in 2Q26, a 74.8% CAGR. Digital Realty, Iron Mountain and Equinix also have a combined $6.5B in new and expansion projects underway in Northern Virginia alone.

Pre-leasing remains an important indicator of underlying demand. As of 2Q26, Digital Realty reported 1,140 MW under construction with 62% pre-leased, while Iron Mountain’s 104 MW pipeline was 100% pre-leased. Equinix reported 604 MW of hyperscale capacity under construction worldwide, with 96% pre-leased.

Capital Markets Are Keeping Pace

Investment isn’t limited to development.

Outstanding data center ABS and CMBS issuance reached $61B year to date, compared with approximately $4B in 2020. Issuance totaled $17B in 1H26 alone, representing a 29% increase over the prior year.

Major financing transactions further demonstrate the depth of capital targeting the sector. Recent activity includes a roughly $14B joint venture between Meta and BlackRock for Meta’s approximately 1 GW El Paso campus, along with substantial financing commitments involving Flexential, 5C Data Centers, Realty Income, DataBank, Edged and Rowan.

Public equity activity may also be reemerging. Vantage Data Centers is reportedly considering an IPO near a $100B valuation, while Switch and CyrusOne have also been reported as considering public offerings.

A More Active Data Center Transaction Market

Historically, data center investment has been heavily weighted toward new development and financing rather than sales of stabilized facilities. That dynamic may be changing.

Several sizable transactions involving modern, institutional-quality assets and portfolios suggest that a broader resale market is beginning to develop. Among them, Digital Realty agreed to acquire interests in three Northern Virginia data centers in a transaction valuing the portfolio at $7.8B. Blue Owl Capital also acquired a 72 MW facility for approximately $860.6M.

Land with access to power is similarly commanding investor attention. Recent transactions in Virginia, Arizona, Alabama and Pennsylvania demonstrate the significant variation in land pricing, and the premium investors are willing to pay for sites with utility capacity, favorable zoning and a viable development path.

Hyperscaler Credit Deserves a Closer Look

Strong demand does not eliminate risk.

Capright’s latest analysis also examines an increasingly important consideration for data center valuation: tenant credit quality.

Microsoft, Alphabet, Amazon and Meta continue to trade at relatively modest bond yield premiums to U.S. Treasuries. Oracle, however, has a materially wider spread, indicating greater perceived credit risk.

S&P Global Ratings downgraded Oracle’s long-term issuer credit rating to BBB- in July 2026, one notch above speculative grade, citing the capital requirements associated with its AI infrastructure expansion and sharply negative free cash flow.

For investors underwriting long-duration data center leases, the takeaway is important: hyperscale tenants should not necessarily be viewed as a single credit-risk category.

What Comes Next for Data Center Real Estate?

The fundamentals remain compelling. Demand is exceptionally strong, vacancy is limited, development pipelines are expanding and significant amounts of institutional capital continue to target the sector.

But the variables determining value are becoming more nuanced.

As Capright’s update concludes, the next phase of data center growth may depend less on demand and more on access to power, execution, tenant quality and disciplined underwriting.

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At Capright, we are uniquely positioned to support institutional investors, operators, and developers navigating this evolving environment. As an independent valuation and advisory firm, we provide clarity, accuracy, and confidence, especially where the stakes are highest.