Why DFW Became America's #3 Data Center Market, and What It Means for Land

For most of the last two decades, the value of an industrial site in North Texas came down to a short list: highway access, rail, labor and a reasonable path through zoning. That list still holds for warehouses. For one of the fastest-growing land uses in the region, it has been overtaken by a single question: can the site get power, and how soon?

Dallas–Fort Worth is now the third-largest data center market in North America. DFW's inventory passed 1,400 megawatts in the first half of 2026, up from 563 megawatts a year earlier, and roughly 95% of the more than 765 megawatts under construction was already preleased, according to Dallas Innovates. Real Estate Forum has tracked the latest market numbers behind that rise. This article looks at the next question: what it means for the land underneath.

Why DFW Won

Data center operators don't choose markets at random. DFW offers a combination few regions can match:

• A large, fast-moving power market. Most of North Texas sits inside ERCOT, the state's own grid, which has added generation quickly and lets large customers contract for power in a competitive market.
• Land. Unlike coastal metros, DFW still has large, contiguous tracts within reach of transmission lines, fiber and labor.
• Connectivity. Dallas has long been one of the country's major network interconnection hubs, which matters for latency-sensitive workloads.
• A central location. Data centers in North Texas can serve both coasts with reasonable latency.
• Business climate. No state personal income tax, established incentive tools, and cities that have grown used to large industrial projects.

Put those together with the AI-driven surge in demand, and DFW moved up the national rankings in a single year.

Power Is Now the First Line of the Land Appraisal

For a data center buyer, the most valuable feature of a site is a credible path to large amounts of electricity. That depends on factors most landowners have never had to think about:

• Distance to high-voltage transmission lines.
• Capacity at the nearest substation, or the cost and time to build a new one.
• Which utility serves the site. Investor-owned utilities, electric cooperatives and municipally owned utilities each have their own processes and timelines.
• Where the site stands in the interconnection process, including any studies already completed.

The result is a split market. Two parcels with identical acreage, zoning and highway access can be worth very different amounts, and the only meaningful difference is power. Sites with a realistic, near-term power path are commanding premiums that ordinary industrial land can't, which is why powered land has become its own category in North Texas.

The grid itself explains the urgency. ERCOT set an all-time peak demand record of 91,089 megawatts in July 2026, and large loads seeking to connect have multiplied: by October 2025, about 205 gigawatts of large load sat in ERCOT's interconnection queue, roughly 70% of it from data centers, according to Sidley Austin. Not all of that will be built. But it shows how many projects are competing for the same capacity.

Texas Raised the Bar With SB 6

In June 2025, Texas passed Senate Bill 6, which reshaped how large electricity users connect to the grid. It applies to loads of 75 megawatts or more, which covers essentially every large data center campus. Through rules being set by the Public Utility Commission and ERCOT, it introduces:

• Standards for large-load interconnection, including proof of site control and study fees
• Requirements to disclose duplicate interconnection requests elsewhere in Texas
• Financial commitments that make developers share interconnection costs
• Equipment that allows ERCOT to curtail large loads during grid emergencies

For land, SB 6 has a clear effect: speculative "queue-and-flip" plays get harder and more expensive. Buyers need real site control and real money behind their interconnection requests. That favors landowners who can offer clean title, a credible utility path and a buyer-ready site, and it makes due diligence on power claims more important than ever.

A Data Center Site Selection Checklist for Landowners and Brokers

Data center site selection teams evaluate dozens of factors. If you own or represent land in North Texas, you should know the main ones before you set a price:

1. Power: distance to transmission, substation capacity, serving utility, and any completed or pending studies.
2. Water and wastewater: many cooling systems use significant water; others trade water for more power.
3. Fiber: proximity to long-haul and metro fiber routes.
4. Acreage and shape: large, contiguous, buildable parcels with room for future phases.
5. Zoning and city position: whether the city welcomes data centers, and any rules on noise, setbacks, generators or screening.
6. Floodplain and environmental constraints.
7. Access for construction: roads capable of handling heavy equipment and transformers.
8. Title and control: clean title, minerals and easements understood, and the ability to grant site control quickly.

A landowner who can answer these questions with documents, not assumptions, is in a far stronger negotiating position.

The Ripple Effects Across North Texas Real Estate

Even if you never sell to a data center, the boom touches your market:

• Industrial competition. Data centers compete with warehouses and manufacturing for land, power and construction crews. DFW industrial vacancy tightened to 8.1% in the second quarter of 2026, with data center demand among the drivers, according to Cushman & Wakefield.
• Construction labor and costs. Electricians, specialized contractors and electrical equipment are in high demand, which affects schedules and pricing for every project type.
• Housing and services. Construction workforces and permanent staff need housing, retail and services near campuses, which can support nearby residential and neighborhood retail.

• City budgets. Large campuses can add significant taxable value. Cities weigh that against infrastructure, water and community concerns, which shapes how welcoming each jurisdiction will be.

   

The Risks Nobody Should Ignore

• Power that never arrives. A site in the queue isn't a site with power. Projects can stall or move elsewhere.
• Curtailment and cost rules. SB 6 rules are still being finalized, and costs and obligations could change project economics.
• Speculative pricing. Asking prices built on a hoped-for data center buyer can leave land unsold if that buyer never appears.
• Community pushback. Noise, water use and visual impact are increasingly part of local debates.

• Concentration. Demand tied to a small number of very large tenants can change quickly with technology or spending cycles.

   

What to Do Next

Landowners: Get the facts on your site's power position before you price it. A short study by a utility consultant can be worth more than an appraisal.

Brokers: Learn the power and water questions buyers ask, and build relationships with utility staff and consultants who can answer them quickly.

Investors and lenders: Underwrite power claims as carefully as title. Ask for the study, not the summary.

Cities: Decide where data centers fit in your plans before the first application arrives. Clear standards speed good projects and avoid fights over the wrong ones.