How Data Center Construction Is Driving Warehouse Demand Across the U.S.

By Sam Laird

The artificial intelligence boom has produced a well-documented surge in data center construction across the United States. What is less obvious—but increasingly clear to industrial real estate professionals watching it play out market by market—is how profoundly that construction wave is reshaping demand for warehouse space.

Data center-related tenants now account for 27% of all new manufacturing leases signed in the first quarter of 2026, the largest share of any tenant category, according to CBRE. That figure represents reflects a pattern that Link Logistics market officers are observing firsthand across more than a dozen markets: In addition to absorbing land, data center development is generating a broad ecosystem of industrial real estate demand.

How Do Data Centers Drive Warehouse Demand?

The connection between data center construction and warehouse leasing operates through several distinct mechanisms.

The first and most immediate is construction staging. Data centers are extraordinarily complex facilities. The contractors building data centers need warehouse space to store and assemble components—electrical skids, cooling systems, structural elements—before those components are transported to the construction site. 

In Atlanta, Link Logistics senior vice president and market officer Ryan Hansen has seen this dynamic firsthand. 

"We initially thought data centers might compete with industrial real estate by taking land that could have been used for warehouses," Hansen says. "But instead, we're seeing significant ancillary demand for industrial space. Construction companies building the data centers need space to stage equipment and materials during construction."

The second mechanism is the supplier and vendor network that forms around any major data center presence. Electrical suppliers, server racking companies, cooling infrastructure providers and equipment maintenance operations all need warehouse space to serve their data center customers. Industrial real estate experts anticipate much of this demand to be sustained rather than one-time, because the equipment inside data centers requires ongoing servicing and replacement throughout the facility's life. Across industrial real estate markets, the data-center-driven manufacturing surge is being led by companies supplying servers, cooling systems and other components that must be continually upgraded—pointing to potentially stable long-term demand rather than a simple construction-cycle spike.

The third mechanism is the supplier network created by the manufacturing operations—chip fabrication plants, battery factories and other facilities—that increasingly accompany major data center clusters. These anchor manufacturers attract their own ecosystem of suppliers and vendors, each of which may need industrial space in the surrounding market.

Which Industrial Markets Are Seeing Data-Center-Driven Warehouse Demand?

The trend of data center construction driving demand for warehouse space is notable for its geographic breadth. Data center-driven industrial demand is not concentrated in a handful of established tech markets—it is showing up across the Link Logistics portfolio from Memphis to Milwaukee, Columbus to Phoenix.

Columbus

Columbus has emerged as one of the country's most significant data center markets, with Amazon, Meta and Google all establishing operations in the area. The effects on industrial real estate have been direct and substantial. Link Logistics recently leased a 740,000-square-foot building to a major third-party logistics provider whose end customer is Meta—the facility stores data center components and equipment to support Meta's campus. 

"More of that supplier and vendor demand is expected as data center development continues," says Brian Doyle, senior vice president and Columbus market officer for Link Logistics.

Read Link Logistics' full Columbus market overview.

Memphis

Memphis has experienced perhaps the most dramatic transformation. Data center and related solar panel storage deals accounted for the majority of recent Memphis industrial market activity, according to Britten Mathews, senior vice president and Memphis market officer for Link Logistics, with data centers alone driving approximately 4 million square feet of net absorption. The catalyst was xAI's decision to establish its data center operations in Memphis, drawn by available power capacity and competitive land and rental costs. 

"The xAI data center investment is beginning to generate supplier and partner demand—companies in the data center supply chain are looking at Memphis as a place to establish operations, which should continue to drive absorption and support demand for big-box product over the coming years," Mathews says.

Read Link Logistics' full Memphis market overview.

Atlanta

Atlanta illustrates how data center demand generates two distinct waves of industrial activity. The first comes from construction staging—companies helping build data centers need nearby facilities for equipment and materials. The second comes from the ongoing servicing ecosystem. 

"These are hugely complex buildings with massive computing power and infrastructure that constantly needs servicing," Hansen says. "Here in the Atlanta warehouse market, we're seeing electrical suppliers, equipment providers and maintenance companies looking for additional warehouse space as they ramp up to service more data centers completing construction in the area." 

Link Logistics' Douglas Hills Logistics Center, a four-building complex in the I-20 West submarket, sits directly in Atlanta's primary data center development corridor and has generated significant interest from companies planning to service data center operations.

Read Link Logistics' full Atlanta market overview.

Phoenix

Phoenix has been reshaped by TSMC's decision to locate its first U.S. advanced semiconductor manufacturing facility there, with total investment projected to exceed $165 billion. The semiconductor campus has driven substantial ancillary industrial demand, with developers constructing warehousing specifically to accommodate the suppliers and vendors supporting TSMC's operations. 

"The ancillary demand from suppliers and service providers is substantial," says Matt Duplantis, senior vice president and Phoenix market officer for Link Logistics. 

Phoenix now boasts the fourth-largest semiconductor workforce in the United States.

Read Link Logistics' full Phoenix market overview.

Milwaukee

Milwaukee is seeing a fundamental shift in its industrial demand profile following Microsoft's announcement of a $20 billion, 15-data-center campus south of the city. Link Logistics assistant vice president Caroline Bryan, who leads leasing operations in the Milwaukee market, has already seen the effects ripple through the industrial market. 

"Tenant demand has increased significantly for electrical suppliers and other contractors servicing these projects," Bryan says. "Link Logistics has seen a meaningful increase in inquiries from insulation groups and electrical providers with contracts tied to both the Microsoft campus and Foxconn's operations. More supplier and vendor demand is expected as data center development continues."

Read Link Logistics' full Milwaukee market overview.

Chicago

Chicago’s natural advantages have made it a draw for data center development. 

"Data centers represent a major growth area, driven by Illinois' natural resources including reliable power, abundant fresh water and a relatively stable climate," says Caitlin Sullivan, senior vice president and Chicago market officer for Link Logistics.  "This expansion has created substantial demand for associated warehouse space in Chicago—companies supplying IT cabinets, HVAC systems, generators and other data center infrastructure are increasingly active."  

Read Link Logistics’ full Chicago market overview. 

Reno

Reno has become a data center destination in its own right, with Northern Nevada's affordable power, fiber infrastructure along I-80 and favorable tax incentives drawing substantial investment—and the supplier network has followed. 

"As data centers expand in Northern Nevada, their suppliers need warehouse space—electrical contractors, server racking companies and assembly operations," Duplantis says. 

These companies typically sign leases tied to the duration of their data center contracts, creating a consistent pipeline of shorter-term industrial demand.

Read Link Logistics’ full Reno market overview. 

DC and Baltimore

The DC and Baltimore market shows the demand dynamic operating in reverse: Data center development in Northern Virginia has been so intensive that it has constrained available industrial supply for traditional users, tightening conditions across the broader market. Michael Walsh, senior vice president and market officer for Link Logistics in the DC and Baltimore region, notes that data center development concentrated in Northern Virginia is "shaping demand across the broader region, both by absorbing industrial land and by catalyzing activity in surrounding corridors."

Read Link Logistics’ full DC and Baltimore market overview. 

What Does Data Center Construction Mean for Industrial Real Estate Users?

For businesses evaluating warehouse and distribution space, the data center effect has practical implications beyond the markets directly hosting major data center campuses.

Companies in the data center supply chain—whether they manufacture components, provide construction services or handle ongoing equipment maintenance—should factor proximity to data center clusters into their site selection decisions. Industrial space is tightening fastest in the markets where data center demand is most active, and available supply for suppliers and contractors is shrinking accordingly.

For businesses outside the data center supply chain, the implication is that markets historically considered secondary are increasingly competitive. Columbus, Memphis and Milwaukee are not the same markets they were five years ago. Data center investment has pulled substantial new demand into each of them, and the industrial space being built to serve that demand is raising the floor for all users. 

The buildout of AI infrastructure shows no signs of slowing, and the industrial demand it generates is likely to be durable—driven not by one-time construction activity but by the ongoing maintenance and upgrade cycles of the facilities being built. For users of warehouse and industrial space across the country, that means the data center era in industrial real estate is likely still in its early stages.

Link Logistics owns and operates industrial properties across 40+ North American markets. Explore available warehouse and distribution space to learn more about industrial real estate opportunities near major data center corridors.