Iowa and Nebraska have become emerging markets for data center development with an  anticipated 1,000 acres or more being acquired in the next 18 months for data center development, according to a report on national data center activity by brokerage firm JLL.

The report looks at activity across the country and the challenges the sector is facing as demand for data center space surges.

According to the report, Iowa and Nebraska have experienced “robust demand” and have attracted large “hyperscalers,” such as Microsoft, Meta and Google. But it also has begun to draw colocation data centers, which are generally smaller and lease space to third-party tenants.

Des Moines, Cedar Rapids and Omaha, Neb., are the primary areas that have experienced that growth in data center development, the report said.

The surge in development has affected power availability across the region, with utilities seeing lead times of five years or more for delivery.

According to the report, demand for data center space pushed vacancy rates nationally to record lows in 2024, with tenants wanting space having to wait two years on average.

Data center vacancy rates fell to 2.6% in 2024. Any second-generation space that becomes available is released within weeks, and of those data centers that are under construction, 72% of space is pre-leased, the report said.

That demand along with limited supply and rising rents has made data centers among the most favored real estate investments, the report said.

Despite growth in the sector, finding available power remains a top challenge for data center developers.

According to the report, the power grid in North America is operating near full capacity, and there isn’t enough available power in most markets to support data center development. With new data centers commonly requiring 100 megawatts of power, and with some requesting up to 1 gigawatt of power, very few utilities have that capacity available to support modern data center development.

Data centers have been spreading across the country into emerging markets, including Iowa, as companies search for power and larger sites that will support larger, multi-phase campus-style developments, the report said.

To read the full report, click here.