Chicago's Data Center Market Booms with Unprecedented Demand Surge

Recent research by JLL reveals that Chicago has emerged as one of the most sought-after data center markets in the United States. The city is experiencing an unprecedented surge in demand for data center space, as highlighted in JLL's second-half 2023 North American Data Center Report.

Demand Outstrips Supply

Chicago boasts over 5.04 million square feet of data center space, with only a fraction, 405,227 square feet, currently vacant. This scarcity of available space poses challenges for data center users in need of adequate square footage.

Expansion Efforts Underway

Despite space limitations, relief is on the horizon with more than 2.28 million square feet of new data center space under construction by the end of 2023, along with plans for an additional 2.03 million square feet.

Rising Absorption Rates

The Chicago market witnessed a significant increase in absorption, with users consuming 297.2 MW of data center space in the latter half of 2023, compared to 88.5 MW in the first half of the year. Early 2024 continues to see strong absorption rates across existing and planned data centers.

Challenges Ahead

However, the Chicago market faces challenges such as power constraints, higher labor costs, and a scarcity of buildable land, which may hinder the development of mega-data centers desired by many users. Additionally, competition from markets with more available power and land poses a threat to Chicago's data center business.

Future Prospects

Despite challenges, the future appears promising for Chicago's data center market, with ongoing demand and upcoming developments slated for 2025 and 2026. Notable projects include data centers for T5, Prime, NTT, CyrusOne, CloudHQ, Aligned, and Edged Energy.

North American Trends

Chicago is not alone in experiencing a surge in demand for data center space. JLL's report indicates a record-breaking 4.3 GW of transactions signed in primary North American data center markets in 2023, with Northern Virginia leading with 1.6 GW of transactions. Secondary markets also saw significant growth, adding 124 MW of absorption in the latter half of 2023.