The global data center industry is experiencing a period of unprecedented expansion. Driven by the relentless growth of artificial intelligence (AI), cloud computing, and the digital transformation of virtually every sector, data centers have become the backbone of the modern economy. Their proliferation is not only reshaping the technological landscape but also generating significant economic benefits and sparking fierce competition among U.S. states. New Jersey, with its proximity to major markets and established infrastructure, is both well-positioned and challenged in this dynamic environment.

The Data Center Boom

In 2024, global revenues were projected at $344 billion, growing to $452.53 billion by 2025, and as high as $1 trillion by 2027. The compound annual growth rate (CAGR) is estimated between 8% and 15% through the end of the decade, reflecting the sector’s sustained momentum. This surge is powered by the explosive adoption of AI, the expansion of cloud services, the proliferation of internet-connected devices, and the growing need for secure, reliable digital infrastructure.

In the U.S., the data center market was valued at $208.38 billion in 2024 and is expected to reach $308.83 billion by 2030, growing at a CAGR of nearly 7%. The demand for new capacity is so intense that 2025 is projected to see 10 gigawatts (GW) of new data center projects break ground globally, with another 7 GW reaching completion—a development pipeline valued at roughly $170 billion.

Economic and Jobs Impact

The economic impact of data centers is profound. Their construction and operation create thousands of jobs, from skilled trades and engineering during the build phase to ongoing roles in IT, security, and facility management. Major construction contractors and subcontractors are generating significant revenues from these complex projects, and local economies benefit from increased demand for services, utilities, and materials.

Beyond direct employment, data centers attract technology companies, spur innovation, and drive demand for renewable energy and advanced infrastructure. The shift from enterprise-owned to cloud and colocation models is accelerating, allowing businesses to reduce costs and increase operational efficiency, while also fueling investments in next-generation technologies like edge and modular data centers.

State Competition for Data Centers

With billions of dollars and thousands of jobs at stake, U.S. states are locked in fierce competition to attract new data center investments. States offer tax incentives, expedited permitting, and—most crucially—access to affordable, reliable power. Location decisions are influenced by proximity to major urban markets, risk factors (such as natural disasters), and the availability of skilled labor.

Primary markets like Northern Virginia, Dallas/Fort Worth, and Silicon Valley have traditionally dominated, but capacity constraints and soaring demand are driving growth in secondary markets. Texas, for example, surged ahead in leasing activity in early 2025, while Las Vegas and Boston posted record growth. However, as demand outpaces supply, power constraints are becoming a critical factor shaping development strategies nationwide.

New Jersey’s Position: Advantages and Disadvantages

Advantages

• Strategic Location: New Jersey’s proximity to New York City makes it a prime location for data centers serving the financial sector, media, and other data-intensive industries.
• Established Infrastructure: The state boasts a mature network of fiber optic connectivity and existing data center facilities, providing a strong foundation for expansion.
• Incentive Programs: New Jersey has launched substantial tax credit initiatives, including a $500 million program aimed at attracting AI and data center investment.

Disadvantages

• Power Constraints: New Jersey faces significant challenges with its electrical grid. The explosive growth in data center demand, especially for AI workloads, is straining the state’s ability to deliver sufficient power to new and existing sites. Without major upgrades, New Jersey risks losing out to states with more robust and scalable energy infrastructure[4].
• Intense Competition: Regions with lower utility costs, abundant land, and aggressive incentive packages—such as Northern Virginia and parts of Texas—are capturing a larger share of new data center projects.
• Tight Supply: Vacancy rates for leased data center space in New Jersey have plummeted, and the pace of new development is struggling to keep up with demand, further limiting the state’s ability to attract large-scale projects.

The Road Ahead

The data center boom is set to continue, with AI and digital transformation driving demand for years to come. For New Jersey, the path forward hinges on addressing its power infrastructure challenges and maintaining its competitive edge through continued investment and innovation. Success will mean not only capturing a share of this high-growth sector but also reaping the economic and jobs benefits that come with it.

Sources

1. U.S. Data Center Market Landscape Report 2025-2030, https://www.globenewswire.com/news-release/2025/06/19/3102231/0/en/U-S-Data-Center-Market-Landscape-Report-2025-2030-Liquid-Cooling-Revolutionizes-the-Industry-for-AI-ML-Demands-Hyperscale-Data-Centers-Fueling-Growth-in-Infrastructure.html
2. 2025 Global Data Center Outlook, https://www.jll.com/en-us/insights/data-center-outlook
3. Q1 2025 US data center market overview, https://www.avisonyoung.us/us-data-center-market-overview
4. Global Data Center Market Share Analysis 2025, Forecast To 2034 – The Business Research Company, https://www.thebusinessresearchcompany.com/market-insights/data-center-market-overview-2025
5. 215 Data Center Stats (June-2025), https://brightlio.com/data-center-stats/
6. Investment Firm: Global Data Center Market to Experience 15% CAGR through 2027, https://insidehpc.com/2025/01/investment-firm-global-data-center-market-to-experience-15-cagr-through-2027/
7. 8 Trends That Will Shape the Data Center Industry In 2025, https://www.datacenterfrontier.com/cloud/article/55253151/8-trends-that-will-shape-the-data-center-industry-in-2025