AI boom collides with "warehouse shortage": U.S. large warehouse vacancy rate plunges from 9.5% to 5.4% in one year

As the AI boom drives data center construction, the U.S. is facing a shortage of large warehouses suitable for assembling data center equipment. Texas billionaire real estate developer Ross Perot Jr. said during an event in Dallas on Tuesday while recording "The David Rubenstein Show: Peer-to-Peer Conversations" that across the U.S., only 15 to 20 vacant warehouses of one million square feet suitable for assembling electronic equipment and other gear used in data centers remain, compared with about 50 typically. In North Texas, where his Hillwood is building the large AllianceTexas data center campus, only one is currently available, he added. "The U.S. is experiencing an industrial boom, and we're running out of warehouses," Perot said. "The scale of the AI supply chain is staggering almost every AI supplier needs 1 million square feet." Jones Lang LaSalle (JLL) said in an October 20 report that the vacancy rate for Class A warehouses of one million square feet and above across the U.S. fell to 5.4% in the third quarter, down from 9.5% a year earlier. As a result, warehouse developers' under-construction development pipeline increased nearly 29% year over year to 317 million square feet, JLL said. The Perot family's wealth is partly built on a data center development business dating back to the 1960s. He said the industry had not been controversial until recently. Data centers have become a hot topic in the U.S. midterm elections, with critics complaining about their heavy electricity and water consumption and the air and noise pollution caused by large sites; supporters say data centers are key to embracing the AI future. "About six months ago nobody was saying anything," Perot said. "They've become controversial, and I think it's a little bit like fracking. People got excited about fracking before they understood it, and now it's a bit like that with data centers." Perot said the industry needs to better explain the benefits data center projects bring to their communities, especially tax revenue. "Once you understand data centers and the prosperity they can bring to communities, they have to be built," he added. "These data centers are a huge source of tax revenue for cities."