Surprises in the Data Center and Colocation Market in 2025

The data center and colocation market in 2025 has seen several unexpected developments that are reshaping the industry landscape. Drawing from the latest reports and insights, here are some of the key surprises that have emerged this year, reflecting both challenges and opportunities in this rapidly evolving sector.

Unprecedented Power Constraints Delaying Growth in Core Markets

One of the most significant surprises in 2025 is the extent to which power availability constraints are hindering growth in established data center hubs. While power scarcity has long been a known issue, the severity of delays in markets like Northern Virginia, West London, and Singapore has caught many by surprise. According to CBRE’s Global Data Centre Trends 2025 report, projects in West London are delayed until 2030 or later due to power limits, and Northern Virginia requires over three years to secure grid power for new facilities. This has forced operators to shift focus to emerging hotspots such as Richmond in North America, Santiago in Latin America, and Mumbai in Asia-Pacific, where power availability is less constrained. The unexpected intensity of these bottlenecks has accelerated a geographic diversification that many did not anticipate happening so quickly.

Rapid Adoption of Nuclear Power Solutions

Another surprising trend is the growing enthusiasm for nuclear power as a solution to meet the escalating energy demands of data centers, particularly for AI-driven workloads. JLL’s 2025 Global Data Center Outlook highlights that nuclear power, including small modular reactors (SMRs), is emerging as a preferred clean energy alternative, with announcements for gigawatts of capacity expected to double in 2025. While nuclear energy was previously considered a long-term prospect, the urgency of power demands and net-zero targets among tech giants has led to faster-than-expected commitments, including multiple power purchase agreements (PPAs) signed in 2024 for active and reactivated nuclear plants. This shift towards nuclear solutions, though still in early stages with commercial deployment not expected until 2030, represents a surprising pivot in energy strategy for the industry.

Hyperscaler Dominance Locking Out Smaller Players

The aggressive pre-leasing by hyperscalers has been more intense than anticipated, effectively locking up significant data center capacity and leaving smaller enterprises and operators struggling for space. As noted in AlphaSense’s 9 Data Center Trends for 2025, a single provider in Northern Virginia secured 430 MW across five buildings, a move that has tightened the market considerably. This consolidation was expected to some degree, but the speed and scale at which hyperscalers like AWS, Microsoft, and Google are securing capacity—through deals like Amazon’s$20 billion project in Pennsylvania and CoreWeave’s$7 billion agreement in North Dakota, as reported by CRN—have surprised industry observers. This has pushed smaller players to pivot towards niche markets like edge computing and compliance-heavy sectors, a shift that is happening faster than many predicted.

Surge in Liquid Cooling Adoption

The rapid transition to liquid cooling technologies to manage the heat from AI and high-density GPU workloads has been another unexpected development in 2025. JLL’s outlook notes that liquid cooling infrastructure has become the default in new constructions, with hybrid approaches (70% liquid, 30% air) becoming standard. What’s surprising is how quickly this technology has moved from niche to mainstream, driven by NVIDIA’s latest chips consuming up to 300% more power than predecessors. Even existing facilities are retrofitting with rear door heat exchangers and direct-to-chip cooling solutions, a trend that was not expected to scale so rapidly. This shift, while necessary, introduces unforeseen challenges in structural design and maintenance costs that operators are scrambling to address.

Market Growth Projections Exceeding Expectations

Finally, the financial growth projections for the data center colocation market have surpassed even the most optimistic forecasts, surprising many analysts. MarketsandMarkets reports a projected market size of$204.4 billion by 2030, growing at a CAGR of 14.4% from$104.2 billion in 2025, while ResearchAndMarkets.com estimates the market will reach$569.58 billion by 2034 at a CAGR of 14.65%. These figures, alongside JLL’s prediction of a 15-20% CAGR for global data center expansion through 2027, reflect a boom driven by AI, cloud computing, and digital transformation that has exceeded prior expectations. The surprise here lies in the sheer scale of investment and demand, with development financing expected to hit another record in 2025, as$170 billion in asset value seeks funding, per JLL’s insights.

These surprises underscore the dynamic nature of the data center and colocation market in 2025, where technological advancements, energy challenges, and competitive pressures are driving unexpected shifts. As the industry navigates these developments, adaptability and innovation remain critical for stakeholders aiming to capitalize on this transformative period.