Texas Surpassed Other States in Data Center Construction

As Virginia faces grid constraints, Texas has moved to lead the nation in new data center capacity.

Updated on Oct. 1, 2026 in Data Centers

Bold flat-color editorial illustration showing a monolithic steel frame structure, representing the large-scale expansion of data center infrastructure. — Texas has emerged as the nation's leader in data center construction, with 6.5 gigawatts of capacity currently underway amid surging demand. AI Illustration. Upload story photo >

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Texas now has 6.5 gigawatts of data center capacity under construction, surpassing all other U.S. states. This surge comes as established hubs like Northern Virginia face severe power supply limits and a record-low 0.2 percent vacancy rate.

Why it matters

The shift reflects a broader search for power-abundant regions as AI-driven colocation demand hits 5.29 gigawatts in Q1 2026. Developers are flocking to Texas for its land availability and current ability to secure grid connections.

Texas currently hosts 4 gigawatts of operating capacity, but construction has accelerated to 6.5 gigawatts with 92 percent of that space already pre-committed by tenants. New leases now include minimum annual rent escalations of at least 3 percent.

The players

Greg Abbott

The Governor of Texas who recently directed the state's utility overseers to audit the massive influx of data center power requests.

Public Utility Commission of Texas

The state regulatory agency responsible for overseeing the Texas electrical grid and energy infrastructure development.

ERCOT

The Electric Reliability Council of Texas, which manages the flow of electric power to more than 26 million Texas customers.

The details

Texas growth is driven by a regulatory environment where counties lack traditional zoning authority, streamlining the approval process for massive facilities. Tenants are securing space years in advance to lock in power access, a trend fueled by the exhaustion of energy supplies in Northern Virginia. Developers are scaling projects rapidly in areas like Austin, which recorded 1,909 megawatts of net absorption in Q1 2026.

Data center rents have increased by 60 percent since 2020.
Data center rents rose 9 percent during 2025.
U.S. colocation net absorption reached 5.29 gigawatts in Q1 2026.
Governor Greg Abbott ordered an audit of power requests on August 3, 2026.
Texas is projected to overtake Virginia in total capacity by 2030.

The Tech Race

Texas is currently following the trajectory of Northern Virginia, the nation's primary colocation hub, by scaling capacity to meet hyperscale demand. The state now aims to surpass Virginia's 8 gigawatts of existing capacity within the next five years.

Commercial tenants and technology companies should expect persistent rent hikes of at least 3 percent annually as developers secure space in high-demand regions. The local power landscape remains fluid, with residents watching for the results of Governor Abbott's August 2026 audit of power requests.

The takeaway

The rapid shift of data center development to Texas suggests a permanent change in how industrial power and land are prioritized for AI. Watch for the findings of the Public Utility Commission of Texas audit, which will signal if the state intends to throttle or accommodate the current construction pace.