New Jersey is at the forefront of a major shift in the data center industry as markets transition from “accelerated growth” to a new phase of “managed growth,” according to the H2 2025 Data Center Update released by Cushman & Wakefield this week.
While demand for AI-driven capacity remains at record highs, the report warns that the “wild west” era of development is being reined in by tighter government regulations, grid constraints, and rising infrastructure costs.
New Jersey has quietly emerged as one of the top five data center markets in the United States, boasting over 1.0 GW of total capacity. The state’s strategic “sandwich” position between New York City and Philadelphia makes it the premier hub for financial service applications and AI “inferencing”—the process of running live AI models that require ultra-low latency.
However, the “managed growth” trend is hitting home for Garden State developers:
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Record Low Vacancy: Vacancy in the region remains at a staggering 3.5%, meaning almost no large-scale space is available for immediate move-in.
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Power Queue Backlog: PSEG and other utilities are seeing record inquiry levels. Currently, the PJM interconnection queue (the regional power grid New Jersey shares) is backlogged with over 4.7 GW of data center requests alone.
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Cost Hikes: Rental rates for data center space in New Jersey have surged, with some mid-year 2025 rates jumping from $130 to over $200 per kilowatt, driven by scarcity.
New Jersey lawmakers are moving quickly to guide this growth. New legislative proposals, such as Bill S-4143, aim to require data centers to run on newly built clean or nuclear power to prevent them from overwhelming the existing grid.
“The next chapter… will be defined less by the scale of demand and more by how effectively markets can streamline the development of new infrastructure,” John McWilliams, head of Data Center Insights at Cushman & Wakefield said.
While established hubs like Secaucus, Newark, and Piscataway remain critical for high-speed trading and fintech, the report highlights a shift toward tertiary markets. In New Jersey, this is manifesting in large-scale “mega-campus” developments in areas like Vineland and Kenilworth, where land is more plentiful and approvals can be more predictable.
