(The Center Square) – Richmond, Va., has become the fastest-growing data center market in the country, according to a new report.
The Q2 2025 market update from real estate firm Avison Young shows Richmond added 720 megawatts of colocation inventory in the first half of 2025, more than any other U.S. market.
Dallas and Fort Worth followed with 400 megawatts, and Chicago added 270 megawatts.
“Despite a brief pause in overall market growth, Richmond experienced exceptional expansion, leading the nation in both absolute and relative terms, with its total inventory increasing more than sevenfold year to date as development from the Ashburn/Sterling corridor pushes further south,” the report said.
Net absorption in the second quarter reached 650 megawatts, which Avison Young said was the highest in the nation.
In plain terms, net absorption measures how much new space companies actually moved into or leased after subtracting any they left behind. It is considered a key sign of strong demand. Vacancy in Richmond is now below 2%. By comparison, Northern Virginia is below 1%, the report said.
Avison Young reported that Richmond has roughly 4 gigawatts of colocation projects and nearly 5 gigawatts of hyperscale capacity either planned or under construction.
Colocation centers are facilities where many companies rent smaller amounts of space, while hyperscale refers to massive, single-user centers built for cloud or artificial intelligence companies.
Growth is being fueled by limited land and power in Northern Virginia’s “Data Center Alley” and rising demand from artificial intelligence and hyperscale cloud companies, according to the report.
The report also noted Henrico County, where new zoning and permit requirements are reshaping projects, while Chesterfield County has seen recent pullbacks, including withdrawals from Tract and Amazon Web Services.
Richmond led the nation in data center growth this year, but local opposition and zoning changes are reshaping the market.
As previously reported by The Center Square, Dominion’s planning documents show electricity demand could triple, raising costs for other customers, and Amazon recently withdrew a Louisa County project after community pushback.
According to the report, companies building artificial intelligence systems are now asking for larger amounts of power, with some projects topping 500 megawatts. It also said shortages of key equipment like transformers could slow projects by two to three years.
With almost no vacancy left in core markets, growth is spreading to suburban and rural areas, the report said, and operators are beginning to look at new power sources such as microgrids, wind, natural gas and nuclear.
The report said low vacancy will persist as supply chain and utility constraints limit new projects, which is expected to keep pushing up rents and sale prices for existing data centers and powered land.
