TL;DR
Primary data center markets are full. Northern Virginia vacancy is 0.72%. Average pricing has crossed $195/kW and keeps climbing. Meanwhile, secondary markets like Austin, Houston, Chicago, and Phoenix offer 15-30% lower rates with capacity you can actually get. But AI inference demand is spreading geographically, and the pricing gap is shrinking. Buyers who lock in secondary market rates now will look very smart in 18 months.
The primary market squeeze
If you need colocation capacity in a primary market today, you’re competing for scraps.
North American data center vacancy hit 1.4% at the end of 2025, an all-time low according to CBRE’s H2 2025 report. Northern Virginia, the world’s largest data center market, dropped to 0.72%. Average asking rates for 250-500 kW deployments reached $195.94/kW, up 6.5% year over year. In NoVA specifically, wholesale rates breached $215/kW, the highest on record.
New supply isn’t coming fast enough to help. Cushman & Wakefield reports that 89% of capacity under construction is already pre-committed. And the bottleneck isn’t space. It’s power. Grid connection timelines in primary markets now average four or more years. You can’t wait that out.
Why capital is flowing to secondary markets
The money has noticed. According to Cushman & Wakefield’s H2 2025 Americas report, 64% of the data center construction pipeline is now in secondary and frontier markets. That’s a structural shift, not a blip.
Three things are driving it.
Power availability. Primary markets face real grid constraints. Secondary markets still have utility infrastructure that can be connected in months, not years.
AI inference is going regional. Training large AI models requires massive centralized clusters. Running those models (inference) requires compute close to users. Deloitte estimates inference will account for two-thirds of all compute by end of 2026, up from one-third in 2023. That demand follows population, not primary market geography.
The economics work. Land is cheaper, power rates are lower, and 36 states now offer data center tax incentives. The combined effect is meaningful.
The numbers tell the story. Columbus has seen 1,800% capacity growth since 2020. Austin is up 500% in the same period. JLL projects Texas will overtake Virginia as the world’s largest data center market by 2030.
| Primary markets | Secondary markets | |
|---|---|---|
| Vacancy | Under 2% | Higher availability |
| Pricing | $195-215+/kW | 15-30% lower |
| Power timeline | 4+ years for grid connection | Months, not years |
| Minimum commitments | Often 500 kW+ | More flexible |
| New supply | 89% pre-committed | Options still available |
The mid-market blind spot
Here’s what most of the coverage misses: almost everything written about secondary markets is aimed at hyperscalers and large enterprises planning multi-megawatt deployments. If you need 10 racks, 50 kW, or even 200 kW, the conversation isn’t designed for you.
But mid-market buyers face the same pricing pressure. And they have an additional problem. The top-tier facilities in secondary markets (CyrusOne, NTT, Digital Realty) often have minimum commitment requirements that put them out of reach for smaller deployments.
That’s where a partner model changes the math. Data Canopy holds capacity at facilities like CyrusOne and Digital Realty across secondary markets, and we can right-size deployments starting at a single cabinet. BlackEdge Capital, a Chicago-based trading firm, started with one cabinet at a CyrusOne facility through Data Canopy. They expanded to four cabinets as the business grew, with room to keep scaling. No long-term overcommitment. No enterprise minimums.
Evaluating secondary markets: what actually matters
Not all secondary markets are equal. Here’s what to weigh when choosing one.
Power and connectivity
Utility reliability and cost per kWh vary widely. So does carrier density. A secondary market with one fiber provider and limited cloud on-ramps is a very different proposition. Look for diverse connectivity and direct access to AWS and Azure. Check whether the facility supports Direct Connect and ExpressRoute before signing anything.
Compliance readiness
A secondary market address doesn’t mean second-tier compliance. Premium facilities in Austin, Houston, Chicago, and Phoenix carry HIPAA, PCI-DSS, SOC 2, and ISO 27001 certifications. HCEDA, a Texas community college, runs a 25 kW deployment in a 10-cabinet private cage at a CyrusOne facility in Austin through Data Canopy. They achieved full PCI, HIPAA, FISMA, SOC, and ISO 27001 compliance there.
The point: you can get the same compliance posture in a secondary market that you’d get in Ashburn or Dallas, often at a better price.
Total cost of ownership
Look beyond the per-kW rate. Factor in power costs (which vary by state and utility), tax incentives, and real estate costs. But watch the policy environment. Over 300 state-level data center bills were filed in the first six weeks of 2026, and several states are reconsidering their incentive programs. What’s favorable today may shift, so understand the incentive terms before building your financial model around them.
The window is closing
The 15-30% pricing advantage in secondary markets is real, but it won’t last forever.
Hyperscaler spillover is already driving prices up in Columbus, Austin, and Atlanta. AI inference demand is inherently distributed. As it scales, it will reach every market with population density. The same forces that squeezed primary markets will eventually reach secondary ones.
The difference is timing. Buyers who lock in secondary market rates now get the best economics of the cycle. Those who wait will find themselves back where they started, competing for limited capacity at higher prices.
Frequently asked questions
What qualifies as a secondary data center market?
Any market outside the established primary hubs (Northern Virginia, Dallas, Chicago, Silicon Valley, Phoenix). Examples include Austin, Houston, Columbus, Atlanta, Salt Lake City, and Denver.
Are secondary markets less reliable than primary markets?
No. Tier III and Tier IV facilities exist in secondary markets with the same redundancy and uptime guarantees as primary market facilities. The facility matters more than the geography.
How much can I save in a secondary market compared to a primary market?
Current data shows 15-30% lower pricing in secondary markets, though the gap varies by location and is narrowing in high-growth markets like Columbus and Austin.
Do secondary markets support compliance requirements like HIPAA?
Yes. Premium data center operators in secondary markets routinely carry HIPAA, PCI-DSS, SOC 2, and ISO 27001 certifications. Your compliance posture depends on the facility and your provider, not the market tier.
What’s the minimum deployment size for secondary market colocation?
It depends on the provider. Working through a partner like Data Canopy, you can start with as little as a single cabinet at facilities that would otherwise require much larger commitments.
See what’s available
Data Canopy has capacity across secondary markets including Dallas-Fort Worth, Houston, Chicago, Austin, Phoenix, Ashburn, and more. Browse our current inventory to see what’s available in your target market, or tell us what you need and we’ll design the simplest path forward.
