The most credible emerging data-center opportunities in 2026 are power-secure alternatives to constrained hubs. Tennessee and the wider Tennessee Valley, West Texas, Querétaro, Johor, Batam, selected Indian cities, Japan’s Osaka/Kyushu/Hokkaido markets, and parts of Southeast Asia and Brazil merit close attention. Their appeal is not simply cheap land or announced megawatts: a viable site needs a firm utility path, scalable land, diverse connectivity, permits, water and cooling resilience, and identifiable customer demand.
Traditional centers still matter. Northern Virginia, London, Frankfurt, Singapore, Tokyo, Dallas–Fort Worth and São Paulo remain strategic, but power, land, water, permitting and available-capacity constraints are pushing the next wave farther from established metros.
Why the data-center map is moving
AI training and inference require much larger power blocks, denser racks and more demanding cooling than conventional enterprise workloads. At the same time, established hubs are struggling to deliver new electricity quickly. CBRE says power-procurement and grid-infrastructure constraints are affecting markets including Northern Virginia, Chicago, London and Frankfurt, while Q1 2026 vacancy was just 0.3% in Northern Virginia and about 1% in Atlanta. CBRE’s 2026 trends report also says land near substations and transmission corridors is becoming unusually valuable.
Long-haul fiber, cloud on-ramps and subsea systems now allow some workloads to operate outside legacy metros. Hyperscalers and neoclouds can trade a little metro proximity for larger campuses, faster power delivery, tax incentives and lower land costs. Cushman & Wakefield describes the same European shift toward alternative locations where power, land, cost and permitting are more workable. Its 2026 comparison evaluates 107 markets across 24 variables.
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The headline supply figures show why this matters. CBRE reports 16 GW of inventory across the 16 largest global markets in Q1 2026, up 25% year over year, with Latin America up 41.3% and North America 33%. Supply is still failing to keep pace with demand.
What counts as an emerging market?
“Emerging” describes different realities, so a watchlist should label the stage of development rather than treating every announcement as operating capacity.
| Category | Meaning | Evidence to require |
|---|---|---|
| Operationally emerging | Live facilities and measurable absorption already exist. | Commissioned capacity, vacancy, absorption and customer mix. |
| Pipeline emerging | Material projects are permitted or under construction. | Utility approval, financing, equipment orders and construction status. |
| Strategically emerging | Power, land, connectivity or policy fundamentals are promising, but execution is unproven. | Site-level studies, delivery dates and credible sponsors. |
| Speculative | Land or project announcements exist without confirmed power, permits, financing or customers. | Do not count it as available supply. |
How to rank a location before committing capital
Use a weighted scorecard, with power and delivery timing carrying more weight than inexpensive land. A regional generation surplus does not prove that a particular parcel can receive 100 MW or 500 MW.
| Criterion | Weight | Verification |
|---|---|---|
| Deliverable power | 25% | Substation capacity, transmission access and a written utility commitment. |
| Time to energization | 15% | Interconnection queue position, upgrade schedule and firm date. |
| Land and campus scale | 10% | Contiguous acreage, zoning and expansion rights. |
| Fiber and connectivity | 10% | Carrier diversity, subsea access and cloud on-ramps. |
| Permitting and political risk | 10% | Zoning, environmental review, moratoria and community response. |
| Water and cooling | 10% | Water source, drought exposure and closed-loop or dry-cooling options. |
| Cost and incentives | 10% | Delivered electricity, land, construction costs and enacted tax treatment. |
| Market demand | 5% | Hyperscaler presence, enterprise demand and AI ecosystem. |
| Labor and contractors | 5% | Electrical, construction and operations workforce. |
JLL estimates global data-center construction costs will reach approximately $11.3 million per MW in 2026, a 6% increase; actual costs vary by density, design, geography and utility scope. JLL’s outlook forecasts about 13 GW of new European supply. Its global outlook projects roughly 97 GW of additional capacity from 2026 onward, a forecast rather than a guaranteed buildout. See the full JLL report.
North America
Tennessee and the Tennessee Valley
Tennessee is one of the strongest secondary-market candidates because it combines industrial land, established logistics and manufacturing infrastructure, access to the Tennessee Valley Authority system and proximity to major enterprise markets. CBRE says data centers represented 18% of TVA industrial load in 2025 and could double by 2030, supported by more than 6 GW of planned generation capacity. Those figures describe a regional outlook, not a guarantee for every site.
Developers should compare Memphis, Nashville, Chattanooga and Knoxville rather than treating Tennessee as one market. Ask whether generation additions are matched by transmission and substation capacity, how large-load tariffs allocate upgrade costs, and whether water supplies and cooling designs remain acceptable during heat or drought. Incentives should be checked for duration, eligibility and clawbacks.
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Best fit: hyperscale campuses, AI training and build-to-suit projects. Principal risk: regional power capacity may not translate into a firm site-level energization date.
West Texas
West Texas offers very large parcels, energy infrastructure and strong renewable-generation potential. CBRE identifies it as an emerging North American market for large deployments. The opportunity depends on ERCOT congestion, transmission expansion and reliable 24/7 supply, not on renewable nameplate capacity alone.
Due diligence should model basis risk, extreme heat, water availability, fiber-route diversity and latency to Dallas, Austin and other demand centers. Projects that depend on behind-the-meter generation, batteries or dedicated plants need financing, fuel and maintenance plans for those assets.
Best fit: very large AI campuses and energy-linked compute for operators willing to build substantial power and resilience infrastructure. Principal risk: abundant generation may still be intermittent or stranded behind transmission constraints.
Texas could overtake Northern Virginia as North America’s largest market by 2030 if planned development is delivered; CBRE presents this as a conditional forecast, not an established outcome. Read the investor-intentions survey.
Latin America
Querétaro, Mexico
Querétaro is the clearest high-growth story in the region. CBRE recorded 298.2 MW of wholesale inventory and 31.5 MW of available capacity in Q1 2026, with inventory up 450.2% year over year. The percentage reflects expansion from a smaller base and should be read alongside absolute megawatts.
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Its advantages include proximity to Mexico City, nearshoring and manufacturing demand, industrial land and a growing provider ecosystem. The key questions are whether capacity is preleased, how quickly the grid can support further additions, and whether water stress, data-sovereignty rules or dependence on a few large customers could constrain growth.
Best fit: hyperscale and wholesale colocation, Mexican enterprise cloud, nearshoring workloads and regional disaster recovery.
Rio de Janeiro and Fortaleza
São Paulo remains the benchmark, with 536.7 MW of wholesale inventory in Q1 2026. CBRE also identifies Rio de Janeiro and Fortaleza as emerging alternatives. Brazil’s four major markets—São Paulo, Querétaro, Santiago and Bogotá—totaled 1,045 MW, up 41.3% year over year.
Rio should be assessed for subsea connectivity, local power and water, enterprise and government demand, physical security and whether it can provide genuine diversification from São Paulo. Fortaleza’s subsea-cable position and renewable potential may favor international connectivity, edge and regional workloads more than a giant AI campus; grid reliability, water and climate exposure remain decisive.
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CBRE says new cable links to North America, Europe and Africa reinforce Brazil’s connectivity role and that data-center fiscal-incentive legislation is advancing. Tax, currency, permitting and infrastructure conditions still vary materially by state.
Asia-Pacific
Johor, Malaysia
Johor offers Singapore adjacency with more land and potentially more scalable power. Its value is strongest where cross-border fiber, cloud on-ramps and industrial-park infrastructure are already established. CBRE lists Johor among the region’s major emerging markets.
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Verify the status of each campus, Malaysia’s transmission plans, water constraints, labor and construction capacity, and the treatment of cross-border data transfers. Johor may support AI-scale demand, but individual parks should not be assumed interchangeable.
Best fit: Singapore-serving hyperscale, wholesale colocation, regional AI and disaster-recovery capacity.
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Batam, Indonesia
Batam combines Singapore proximity, available land and a potentially lower operating-cost base. CBRE cites its location, land and near-term power potential. The investment case still depends on firm electricity, subsea and terrestrial route diversity, Indonesian localization rules and specialist labor.
Best fit: Indonesian and Singapore-adjacent cloud, disaster recovery, edge services and cost-conscious colocation. Maritime, environmental and disaster risks deserve a separate resilience review.
India: choose the city, not the country
India is a major growth region, but Mumbai, Chennai, Hyderabad, Bengaluru, Delhi-NCR and emerging cities have different utilities, state rules, land markets and fiber profiles. CBRE cites cloud adoption, domestic demand and government incentives as drivers. Assess renewable open-access rules, data-protection requirements, equipment logistics and local cooling capability at state level.
Best fit: domestic cloud, sovereign AI, enterprise colocation, inference and large hyperscale projects in power-secure submarkets. Fragmented regulation and infrastructure quality are the main constraints.
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Japan beyond Tokyo
Osaka, Kyushu and Hokkaido are attracting incremental enterprise and AI demand while diversifying from Tokyo. CBRE identifies these markets as North Asian locations to watch. Regional grid timelines, domestic and subsea fiber, land, seasonal cooling and earthquake, tsunami, volcanic and weather exposure should determine the workload.
Best fit: regional cloud, disaster recovery, government and enterprise systems, inference and selective hyperscale expansion.
Indonesia, Vietnam and Thailand
These countries form a growth cluster rather than a single market. Cloud adoption, domestic digital demand, improved connectivity and government incentives are positive, while data-localization rules, foreign-investment policy, electricity reliability, subsea landings, monsoons, flooding and heat vary by country and city. CBRE includes all three in its Southeast Asian growth outlook.
Best fit: domestic cloud, regional edge, enterprise colocation, inference, disaster recovery and regulated workloads.
Europe and the Middle East
Brussels
Brussels can serve EU institutions and enterprise customers while connecting Western European metros. Its constraints are Belgian grid delivery, environmental permitting, land and cross-border power and fiber dependencies. CBRE has previously included Brussels among emerging European markets. It is a connectivity and regulated-workload opportunity, not automatically a low-cost one.
Zurich
Zurich offers high-value financial and enterprise demand, strong connectivity and institutional stability. Land, electricity and construction costs, together with Swiss environmental and permitting rules, may limit very large AI campuses. Its strongest case is regulated, high-reliability capacity rather than commodity scale.
Middle Eastern markets
JLL expects part of European-region growth to come from Middle Eastern markets pursuing digital transformation, sovereign cloud and AI programs. The outlook is strategic, not a blanket endorsement of every announced project. Before naming a country or site, confirm utility commitments, government-backed demand, subsea and terrestrial connectivity, cooling and water plans, data-residency rules, ownership restrictions, financing and the sponsor’s execution record. Extreme heat, water consumption and geopolitical risk require more scrutiny than a capacity ranking.
Quick Recap
Match the market to the workload
| Workload | Most important location characteristics |
|---|---|
| Frontier-model training | Large firm power blocks, high-density cooling, resilient east-west networking and campus scale. |
| AI inference | User proximity, regional distribution and predictable latency. |
| Cloud infrastructure | Carrier diversity, enterprise demand and cloud ecosystems. |
| Disaster recovery | Geographic separation, reliable power and replication connectivity. |
| Sovereign AI | Domestic data rules, government support and appropriate ownership or control. |
| Edge computing | User proximity and network latency over inexpensive land. |
| Batch HPC | Low delivered power cost and land may outweigh metro proximity. |
Risks that can derail a promising market
- Announcements mistaken for supply: classify projects as announced, permitted, financed, under construction, commissioned or operational.
- Generation mistaken for deliverability: check transmission, substations, interconnection approval, firm utility contracts, energization dates and backup requirements separately.
- Power price treated as total cost: include upgrades, generators, batteries, cooling, water, fiber, taxes, labor, insurance, financing and delay costs.
- AI density ignored: conventional colocation and GPU campuses have different electrical, cooling, floor-loading and network designs.
- Water and climate overlooked: test drought, wet-bulb heat, flood, hurricane, wildfire, earthquake and community acceptance of industrial water use.
- Renewables assumed to be firm: evaluate storage, firming, congestion, curtailment, transmission, backup and contract structure.
- Connectivity overstated: confirm multiple physically diverse routes rather than relying on one carrier or landing station.
- Vacancy misread: low vacancy can coexist with high construction costs, customer concentration and delayed grid delivery; measure operational inventory, preleasing, absorption and available capacity.
A practical investment screen
- Request a parcel-specific utility study showing substation, transmission, upgrade responsibility and a target energization date.
- Confirm zoning, environmental review, water rights, generator rules, noise limits and public-hearing status.
- Map diverse terrestrial and subsea fiber routes and test latency for the intended workload.
- Model cooling at peak wet-bulb conditions, including dry or closed-loop alternatives and drought restrictions.
- Separate operational, under-construction, permitted and merely announced megawatts; identify preleased capacity and customer concentration.
- Stress-test financing, equipment lead times, tax incentives, currency exposure, insurance and a one- to two-year power delay.
- Score the site using weighted criteria, then commission legal, engineering, environmental and utility diligence before acquisition.
Which buyers should prioritize which markets?
- Hyperscalers: Tennessee, West Texas, Querétaro, Johor and selected Indian or Japanese submarkets where campuses can scale and power can be contracted.
- AI startups and GPU-cloud operators: prioritize commissioned or near-term capacity, high-density cooling and network availability over cheap but speculative land.
- Enterprise IT: favor carrier-rich Johor, Querétaro, Brussels, Zurich, Osaka and established regional ecosystems where compliance and support matter.
- Colocation operators: target markets with diversified demand, reliable utility paths and enough construction labor to deliver multiple phases.
- Sovereign-cloud providers: evaluate India, Southeast Asia, Brazil and government-backed Middle Eastern programs against data-residency and ownership rules.
- Edge users: choose Fortaleza, Batam, regional Indian cities or Southeast Asian metros when latency and local regulation outweigh campus scale.
The 2026 watchlist in one view
| Market | Primary opportunity | Main catalyst | Main constraint |
|---|---|---|---|
| Tennessee Valley | Hyperscale and AI campuses | Utility scale, land and industrial base | Site-level transmission and tariff delivery |
| West Texas | Very large energy-linked compute | Land and generation potential | ERCOT congestion, heat and water |
| Querétaro | Wholesale, hyperscale and nearshoring | Fast inventory growth and Mexico demand | Water, grid and customer concentration |
| Johor | Singapore-adjacent cloud and colocation | Land and regional connectivity | Cross-border regulation and congestion |
| Batam | Indonesia/Singapore cloud and edge | Location and lower-cost potential | Power, labor and ecosystem depth |
| India | Domestic and sovereign AI/cloud | Digital demand and policy support | State-by-state infrastructure and rules |
| Osaka/Kyushu/Hokkaido | Regional cloud and resilience | Demand diversification from Tokyo | Disaster exposure and grid planning |
| Rio/Fortaleza | Regional cloud and connectivity | Domestic demand and cable access | Tax, currency, grid and water variation |
| Brussels/Zurich | Regulated and high-value enterprise workloads | Connectivity and institutional demand | Cost, land and permitting |
| Middle Eastern programs | Sovereign AI and digital transformation | Government-backed demand and capital | Heat, water, geopolitics and execution |
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