The AI boom is creating new demand for warehouse space as technology companies build and maintain massive data centers, Bloomberg reports.
Companies such as Meta Platforms and Google are leasing warehouses to store equipment needed for construction and operations, especially in areas like northern Virginia’s “Data Center Alley.” Data center-related tenants are expected to lease about 4 million square feet of warehouse space in the mid-Atlantic region this year, up from 2.8 million square feet last year, with demand potentially reaching 14 million square feet by 2030.
This additional demand is helping warehouse landlords absorb excess space left from pandemic-era overbuilding and is driving higher rents in some key markets.
Data center construction delays have increased the need for storage, as large amounts of equipment must be held before installation. In the Washington, D.C., metro area, data center-related tenants accounted for more than 40% of new industrial leasing in 2025, and northern Virginia industrial rents have risen 20% over the past three years.
However, the growth is not without challenges. Power constraints, stricter regulations, zoning issues and community opposition could slow future data center development. Some proposed projects have already been canceled due to local resistance.
While the broader industrial real estate market remains weak, with higher vacancy rates and limited rent growth, AI-driven demand is providing a significant boost in data center hubs. Because data center companies can often pay more than traditional warehouse users, continued expansion could increase competition and raise costs for smaller tenants.
