North America added a whole Silicon Valley’s worth of data center inventory this year. It’s not enough.

North America’s eight primary data center markets added 515 megawatts (MW) of new supply in the first half of 2024 — the equivalent of Silicon Valley’s entire existing inventory — according to a new report real-estate services firm CBRE.

All of Silicon Valley has 459 MW of data center supply, while those main markets have a total of 5,689 MW. That’s up 10% from a year ago and about double what it was five years ago.

Data center space under construction is up nearly 70% from a year ago and is currently at a record high. But the vast majority of that is already leased, and vacancy rates have shrunk to a record low of 2.8%. In other words, developers are building an insane amount of data center capacity, but it’s still not enough to meet the growing demands of cloud computing and artificial intelligence providers.

A shortage of available power and necessary equipment, like transformers, switches and generators, is contributing to years-long delays, but that hasn’t dampened demand, as companies secure future data center capacity anyway.

“We’re signing leases that some of these clients won’t occupy for three or four years,” Pat Lynch, executive managing director and global head of CBRE Data Center Solutions, told Sherwood. Additionally, Lynch said enterprises are renewing existing data center leases even if they’d prefer newer data centers that can better handle their increasingly demanding workloads.

“They have no other choice,” he said. “It just shows that their capacity need is not going anywhere, and they just want to get in on it.”

That demand has sent national rental rates up 6.5% on average and much higher for newer premium spaces in premium markets. The imbalance makes it a data center landlord/owner-operator’s market, which Lynch expects to continue for the next few years.