As demand for AI-ready infrastructure and enterprise cloud capacity increases, Arizton Advisory and Intelligence’s latest report estimates that the US colocation data center investment market will balloon to a value of US$ 85.18 billion by 2031 on the back of cumulative investment of US$ 462 billion.
This is a massive degree of growth considering that, as of 2025, the US colocation data center market had an investment value of US$ 43.71 billion. That growth, according to Arizton, will be led by demand for hyperscale AI capacity. At present, AI investments aren’t keeping pace with hyperscale expansion, but capacity for AI workloads is expected to almost triple between 2026 and 2031.
Investment in AI capacity at colocation facilities is vital given the higher power densities present in these facilities. That investment must be used to fund liquid cooling, high-capacity electrical systems, and AI-ready designs in order to address the demands of AI compared to other workloads.
To add complications to the equation, sustainability is a key consideration for investors and it goes beyond simply reducing carbon emissions. Long-term power purchase agreements, on-site solar and wind generation, and battery energy storage systems are all key considerations for investors looking to back colocation data center projects. This is great news for the likes of Equinix and CyrusOne, which are both targeting carbon neutrality by 2030. As Arizton notes, there is a shift happening in the market and operators would do well to respond, particularly with the market’s colocation power capacity projected to reach 7,542 MW by 2031.
Looking at geography, Arizton highlights that the Southeast region of the US will add 13,628 MW of capacity through 2031, attracting some US$ 15.04 billion in investment, just ahead of the US$ 14.95 billion investment expected in the Southwest region of the country. Granted, the Southeast region is where Northern Virginia, with over 4 GW of installed capacity. The Northeast of the US is also prime real estate for colocation data centers with New York and New Jersey, boasting vacancy rates within colocation hubs well below 6 percent. The Southwest is slowly gaining favor in the market with Arizton reporting that 90 percent of investments in the region are taking place in Texas and Arizona.
All of this is, however, framed against an increasingly combative market from outside forces. Communities around data centers and proposed data centers are pushing back with force. QTS backed out of a data center project in Prince William County, Virginia, last week following several challenges from members of the community. This week w.media reported that Townsite Solar 2 has decided to build a data center on federal land, a move that could sidestep the local opposition that has stalled other projects. The money then is the easy part, the harder question is where operators will actually be allowed to spend it.