Data centers on what was recently farmland in Aldie, VA. (Jahi Chikwendiu/The Washington Post via Getty Images)

Companies are so desperate for data centers they're leasing them before they’re even built

5/16/24 9:46AM

Data center construction levels are at an all-time high. And more than ever, companies that need them have already called dibs.

In the first quarter of 2024, what amounts to about half of the existing supply of data center megawattage in the US is under construction, according to real estate services firm CBRE. And 84% of that is already leased. Typically that rate had been about 50% the last few years — already notably higher than other real estate classes.

“I’m astonished and impressed by the demand for facilities yet to be fully constructed,” CBRE Data Center Research Director Gordon Dolven told Sherwood.

That advanced interest means that despite the huge amount of construction, there’s still going to be a shortage of data centers to meet demand. In other words, data center vacancy rates are staying low and rents high.

Nationwide the vacancy rates are near record lows of 3.7% and average asking rent for data centers was up 19% year over year, according to CBRE. It was up 42% in Northern Virginia, where many data centers are located. These sorts of price jumps are “unprecedented” compared with other types of real estate. For comparison, rents for industrial and logistics real estate, another hot asset class used in e-commerce, is expected to go up 8% this year.

As such, data center REITs like Digital Realty, Equinix, and Iron Mountain have been performing really well.

The backlog of demand isn’t going away anytime soon. It takes a really long time to build data centers because it doesn’t just require building data centers. Data centers need updated power grids, fiber lines, and water to come online, and often those connections have to be built as well. And those are subject to supply chains, permitting, easements, and other roadblocks.

As Dolven put it, “Instead of a dirt road, they need 6-lane highways.”

Getting all that squared away adds an additional 1-3 years at least on top of 1-3 years it already takes to build the typical data center, Dolven said.

And our need for data centers and the infrastructure they rely on is only going up. Not only are the applications we use daily collecting, generating and parsing tons tons of data, but the rise of generative AI is going to turbo charge these needs even more.

As my colleague Matt Phillips pointed out, data centers were already sucking up vast amounts of power before the AI boom. Indeed, data center electricity demands are running up against power companies’ ability to generate it.

Chris Stokel-Walker

Bot bias

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Prediction markets have, predictably, been given a boost by the summer of sports

Major platforms like Kalshi and Polymarket have seen huge upticks in users of late, thanks in no small part to what’s felt like a recent sporting smorgasbord, with major competitions across hockey, basketball, and soccer soaking up fans’ time (and spending, clearly) at the outset of summer.

While gaming industry groups may not like it, there’s been a huge change in the methods people are using to put money on the big games, with everyone from fortunate NYC bar owners, to a far less fortunate Spanish supporter, turning to prediction markets to try and turn their sports know-how into cold, hard cash.

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

2026 World Cup Reverses Seasonal Lull for Sports Betting Apps

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

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Gold Tesla Cybercabs are piling up, but they’re not picking up passengers yet

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Britain announces social media ban for under-16s starting early 2027

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Anthropic pulls Fable and Mythos access worldwide after Trump administration bars their use by foreign nationals

Only days after releasing two versions of its next-gen AI model, Anthropic has disabled them for users worldwide.

Anthropic says it received a Friday night order from the Trump administration to suspend access to the models for any foreign national (anywhere in the world) — a group that included some Anthropic employees. In response, the company turned off access to everyone.

Last week, the company released to the public its much-anticipated Claude Fable 5 model (and its restricted version Claude Mythos 5, which is still being tested with trusted partners). Anthropic said in a blog post announcing the action that officials cited national security concerns with the new models, while offering few specific details.

The post said that the government gave the company “verbal evidence of a potential narrow, non-universal jailbreak” of the public Fable 5 model. A jailbreak is a means by which users can evade restrictions built into the code to unlock prohibited functionality. Anthropic downplayed the significance of the attack, and said other major models, such as OpenAI’s GPT-5.5, could also be affected by the technique described.

Fears of these first Mythos-class models being misused are running high, after Anthropic warned the cybersecurity world in May that the advanced cyber capabilities of Mythos have rapidly discovered thousands of vulnerabilities in ubiquitous software, leading to the decision to restrict the full version of the model to a close group of trusted partners for testing.

This morning, Axios reported that Anthropic technical staff have flown to Washington to meet with White House officials to resolve the issue.

The Wall Street Journal is reporting that the Trump administration’s decision to take action against Anthropic was prompted by discussions that Amazon CEO Andy Jassy had with officials, including Treasury Secretary Scott Bessent. According to the report, Amazon researchers said they had been able to evade some of Fable 5’s security restrictions using specific prompts. Amazon is a major investor in Anthropic.

Anthropic is currently suing the US government to fight the Pentagon’s blacklisting of the company on national security grounds.

Statement on the US government directive to suspend access to Fable 5 and Mythos 5