The best-performing sector will be data centers

The best-performing sector in 2025 will be the data center market. The data center market has been “on fire” and has seen tremendous demand to meet the needs of enterprise providers moving from on-site applications to cloud-based information technology and artificial intelligence solutions. The global data center market is valued at $242 billion in 2024 and will increase to over $584 billion in 2032. Data center investments also have a low correlation with other CRE asset types. The vacancy rate is 3% and the net absorption of space in Q1-24 was 2,755MW (megawatts), a record. There is over 5.3MW of space currently under construction with average rents at $127-$321/kw/month and up 13%-22%, from Q1-23. The primary concern is power access as current and future data center demand has placed exorbitant strains on electricity, gas, and even nuclear power generation.