Report: Houston sees uptick in data center leasing activity

by the numbers

According to a report from CBRE, Houston registered the eighth-most data center leasing in North America in first half of 2021. Photo by Christina Morillo/Pexels

Houston's data center market is electrified. In the first half of 2021, the local data center market saw the eight highest amount of leasing activity among the 17 North American markets tracked by commercial real estate services company CBRE.

In the first half of this year, the Houston data market experienced net absorption of 5.7 megawatts worth of capacity, up 119 percent from the first half of last year, CBRE says. Net absorption is a key indicator of leasing activity.

During the past year, Houston has added 5.1 megawatts of inventory, dropping the vacancy rate for data centers to 18.5 percent, according to CBRE.

"There have been a few large transactions in the first half of the year that added to Houston's increased absorption numbers," Brant Bernet, senior vice president in CBRE's Dallas office, says in a September 7 news release. "The major storyline for the Houston market is investor interest."

A handful of data center acquisitions already have occurred this year in the Houston area, and more could be on the horizon, Bernet said. Datacenters.com lists 20 privately owned data centers in the Houston area. Among all landlords, Dallas-based CyrusOne owns the most data centers in the Houston market — four.

In June, Las Vegas-based data center operator Switch completed its purchase of Austin-based data center company Data Foundry for $420 million. In Houston, Data Foundry operated two data centers totaling 370,000 square feet. At the end of 2021, Switch plans to develop more data centers in Houston and Austin that are set to open in 2023.

The smaller of Switch's two newly acquired data centers here is a 20,000-square-foot facility at 5555 San Felipe St. in West Houston. The larger one, encompassing 350,000 square feet, sits on an 18-acre site at 660 Greens Pkwy. in North Houston.

In March, Vienna, Virginia-based data center operator Element Critical purchased Skybox Datacenters' facility in Katy for an undisclosed amount. The more than 96,000-square-foot data center sits on 20 acres at 22000 Franz Rd. Skybox is based in Dallas.

A CBRE report indicates Houston's data center market remains dominated by international energy companies, finance companies, and regional health care providers. Demand comes largely from locally based companies.

Phillip Marangella, chief marketing officer at Herndon, Virginia-based EdgeConneX, is among insiders in the data center industry who are bullish about the future of data centers. EdgeConneX operates a 93,400-square-foot data center at 1510 Prime West Pkwy. in Katy.

"Data centers will be processing more workloads, more data, more video, more machine learning, and [will be] serving as facilitators for a global transformation in business, even smaller or more regional enterprises," Marangella tells Data Center Frontier. "Data centers are becoming part of an infrastructure fabric of capacity, connectivity, power, and proximity that is empowering enterprises to take advantage of the location, the scale, and the economics that work for them."

Edward Henigin, CTO of Data Foundry, sums up what he thinks the future of work from home will look like. Photo by Maskot/Getty

Texas expert: What does the future of remote work look like?

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Since the start of the pandemic, the idea that this event will change the way we live and work now and, in the future, has been a on the minds of everyone.

It's true that remote work has become a mainstay of day-to-day operations, and now the traditional offices are looking more and more like the office environment of the past. In a recent survey published in July 2020, it revealed that before the pandemic, only 17 percent of responding U.S. employees worked from home at a rate of five days or more per week. At the time, this survey was conducted in April, however, that share had increased to 44 percent. Even as pandemic response developed, a Gallup poll from October revealed that 33 percent of U.S. workers were still working remotely.

So, the question remains: What will the future of remote work look like for enterprises?

Changes we've seen so far

Businesses have already been finding their footing with the assistance of an array of platforms and solutions, all of which have helped them pivot quickly and successfully through the use of more digital means. Right now, we see that cloud-based collaborative applications like Microsoft Teams, Slack, and Zoom (which had its daily user numbers more than quadruple by April 2020) have become the backbone of many new workplace IT strategies, offering an ability to bridge the distance and ensure seamless cooperation.

Meanwhile, to keep a growing number of endpoints and devices secure as employees use home networks and personal computers to log onto work environments, Virtual Private Networks (VPNs) have become key. Studies show that VPN usage increased by 124 percent in the U.S. between March 8 and March 22, 2020. This can be attributed to the technology's ability to help businesses ensure protected file sharing, data encryption, secure remote access, and more. These are all crucial elements for keeping the expanding footprint of the enterprise network safe.

Finding a balance

There is no one-size-fits-all approach to managing remote work transitions. Some businesses will require more on-site work while others may make a more comprehensive transition away from central office locations. As we move forward, it's likely that we'll see many organizations settle somewhere in the middle with a hybrid strategy that allows distanced operations where feasible and on-site work where needed.

Overall, it's clear that across these many different applications and use cases, the importance of digital infrastructure has increased. Regardless of what platforms or services are in use, the network and other foundational IT infrastructure have become central to success as businesses expand their bandwidth needs, incorporate data-centric solutions, and depend on reliable, speedy communications. It will be crucial moving forward that businesses not only adapt to the challenges they currently face, but plan for a flexible long-term work strategy.

Understanding how the company will need to function and what services it will need to achieve success in any given strategy will be paramount, and after an individualized vision is developed, technology action plans will need to start rolling out. For some this may mean adjusting IT equipment environments (like moving on-premises data center assets to outsourced facilities), for others this may mean expanding their networks or implementing new cloud-based connectivity.

All in all, agility and flexibility are at the core of the reimagined enterprise, and planning is the enabler of both these business virtues. Now is the time to look forward, not only for the sake of preparation, but for the sake of keeping our eyes on a brighter, stronger, and more dynamic future.

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Edward Henigin is CTO at Austin-based Data Foundry, which has a growing data center location in Northwest Houston.

Data Foundry debuted its most recent expansion in North Houston, but that's just the start of the Austin-based company's growth in the Bayou City. Photo courtesy of Data Foundry

Data center in North Houston unveils newest expansion — with more growth planned

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Data Foundry Inc. may be finished with its 27,000-square-foot expansion at the company's data center in North Houston, but it's by no means finished growing at the site.

The Austin company's 18-acre, master-planned campus at 660 Greens Pkwy. allows for another 200,000 square feet. At build-out, Data Foundry will operate 350,000 square feet of space there.

Currently, the data center encompasses 150,000 square feet. The recent expansion completes the development's first phase. Each of two future phases will add 100,000 square feet.

So far, there's no timetable for the data center's second and third phases.

"It's all a function of demand. We will deploy the capital in response to the pace at which we end up filling up the new space," says Ed Henigin, chief technology officer of Data Foundry.

The 27,000-square-foot expansion debuted in late January at Data Foundry's Houston 2 Data Center. Henigin says space remains available there, but the company does have prospective tenants in the pipeline. It could take anywhere from six months to four years to lease the entire expansion, he says.

Data Foundry says increased customer demand along with business growth in Houston — especially in the healthcare, energy, and manufacturing sectors — prompted the four-megawatt expansion.

"For folks who are outside of Houston, it's an underappreciated market," Henigin says. "It's a huge economy, and there's a lot of dynamic activity happening in Houston and a lot of growth."

Generally, demand for data center space in Houston is "steady and healthy," Henigin adds.

"I don't think we're really overserved or underserved at this point. I think we're pretty well-balanced," he says.

Henigin points out that demand can shift depending on the region's economic conditions, such as upswings or downturns in the energy sector.

"A lot of the folks who have businesses in Houston have learned to be a little cautious, because you don't necessarily know when the next dry spell is coming," he says. "So there's a lot of careful planning or careful execution in business practices in order to be resilient."

Although Houston ranks as the fifth largest metro area in the U.S., it's not among the country's 10 biggest data center markets, unlike Dallas-Fort Worth and Austin/San Antonio. According to DataCenterMap.com, 40 data centers operate in the Houston area. A number of the region's data centers are in North Houston, The Woodlands, and Katy, according to datacenterHawk.

Among Data Foundry's competitors in the Houston market are CyrusOne Inc., Skybox Datacenters LLC, and Stream Data Centers LP — all based in Dallas — and San Francisco-based Digital Realty Trust Inc., according to datacenterHawk.

Customers of Data Foundry's Houston 2 Data Center include Carrizo Oil & Gas Inc., FMC Technologies Inc., Marathon Oil Corp., and Mattress Firm Inc. — all based in Houston — and Galveston-based Moody National Bank.

Houston 2 offers a 185 mph wind-rated infrastructure and an elevation above the 500-year floodplain. During Hurricane Harvey, tenants didn't lose power or network service, or experience flooding, Data Foundry says.

Data Foundry has operated data centers in the Houston area since 2002. Its other Houston data center, inside the Marathon Oil Tower at 5555 San Felipe St., comprises 20,000 square feet.

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5+ must-know application deadlines for Houston innovators

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Editor's note: As 2026 ramps up, the Houston innovation scene is looking for the latest groups of innovative startups that'll make an impact. A number of accelerators and competitions have opened applications. Read below to see which might be a good fit for you or your venture. And take careful note of the deadlines. Please note: this article may be updated to include additional information and programs.

Did we miss an accelerator or competition accepting applications? Email innoeditor@innovationmap.com for editorial consideration.

2026 HCC Business Plan Competition

Deadline: Jan. 26

Details: HCC’s annual Business Plan Competition (BPC) is an opportunity for proposed, startup and existing entrepreneurs to develop focused plans to start or grow their businesses. Accepted teams will be announced and training will begin in late February and run through early June, with six free, three-hour training sessions. Advising will be provided to each accepted team. Applicants can apply as a team of up to five persons. Finalists will present to to gudges on May 27, 2026. Last year, $26,000 was awarded in seed money to the top five teams. In-kind prizes were also awarded to all graduating teams including free products, services and memberships, with an estimated in-kind value totaling $147,000. Find more information here.

University of Houston Technology Bridge Innov8 Hub (Spring 2026)

Deadline: Jan . 30

Details: UHTB Innov8 Hub’s immersive, 12-week startup acceleration program designed to help early-stage founders launch and scale their technology startups. Selected participants will gain access to expert mentors and advisors, collaborate with a cohort of peers, and compete for cash prizes during our final pitch event. The cohort begins Feb. 16, 2026. The program culminates in Pitch Day, where participants present their ventures to an audience of investors and partners from across the UH innovation ecosystem. Find more information here.

Rice Business Plan Competition 2026

Deadline: Jan. 31

Details: The Rice Business Plan Competition, hosted by the Rice Alliance for Technology and Entrepreneurship, gives collegiate entrepreneurs real-world experience to pitch their startups, enhance their business strategy and learn what it takes to launch a successful company. Forty-two teams will compete for more than $1 million in cash, investments and prizes on April 9-11, 2026. Find more information here.

Rice Veterans Business Battle 2026

Deadline: Jan. 31

Details: The Rice Veterans Business Battle is one of the nation’s largest pitch competitions for veteran-led startups, providing founders with mentorship, exposure to investors and the opportunity to compete for non-dilutive cash prizes. The event has led to more than $10 million of investments since it began in 2015. Teams will compete April 8-9, 2026. Find more information here.

TEX-E Fellows Application 2026-2027

Deadline: Feb. 10

Details: The TEX‑E Fellowship is a hands-on program designed for students interested in energy, climate, and entrepreneurship across Texas. It connects participants with industry mentors, startup founders, investors and academic leaders while providing practical, "real-world" experience in customer discovery, business modeling, and energy-transition innovation. Fellows gain access to workshops, real-world projects, and a statewide network shaping the future of energy and climate solutions. Participants must be a student at PVAMU, UH, UT Austin, Rice University, MIT or Texas A&M. Find more information here.

Greentown Go Make 2026

Deadline: March 10

Details: Greentown Go Make 2026 is an open-innovation program with Shell and Technip Energies. The six-month program is advancing industrial decarbonization by accelerating catalytic innovations. Selected startups will gain access to a structured platform to engage leadership from Shell and Technip Energies and explore potential partnership outcomes, including pilots and demonstrations. They’ll also receive networking opportunities, partnership-focused programming, and marketing visibility throughout the program. The cohort will be selected in May. Find more information here.

Houston startups closed $1.75 billion in 2025 VC funding, says report

by the numbers

Going against national trends, Houston-area startups raised 7 percent less venture capital last year than they did in 2024, according to the new PitchBook-NVCA Venture Monitor report.

The report shows local startups collected $1.75 billion in venture capital in 2025, down from $1.89 billion the previous year.

Houston-based geothermal energy company Fervo Energy received a big chunk of the region’s VC funding last year. Altogether, the startup snagged $562 million in investments, as well as a $60 million extension of an existing loan and $45.6 million in debt financing. The bulk of the 2025 haul was a $462 million Series E round.

In the fourth quarter of last year, Houston-area VC funding totaled $627.68 million. That was a 22 percent drop from $765.03 million during the same period in 2024. Still, the Q4 total was the biggest quarterly total in 2025.

Across the country, startups picked up $339.4 trillion in VC funding last year, a 59 percent increase from $213.2 trillion in 2024, according to the report. Over the last 10 years, only the VC total in 2021 ($358.2 trillion) surpassed the total from 2025.

Nationwide, startups in the artificial intelligence and machine learning sector accounted for the biggest share of VC funding (65.4 percent) in 2025, followed by software-as-a-service (SaaS), big data, manufacturing, life sciences and healthtech, according to the report.

“Despite an overall lack of new fundraising and a liquidity market that did not shape up as hoped in 2025, deal activity has begun a phase of regrowth, with deal count estimates showing increases at each stage, and deal value, though concentrated in a small number of deals, falling just [8 percent] short of the 2021 figure,” the report reads.

Sandbox VR brings new gaming center to Houston's tech-savvy population

Get In The Game

Sandbox VR, a futuristic, full-body virtual reality gaming experience, has announced it will enter the Houston market this month, opening its first local gaming center on January 23.

"Houston's reputation as a hub for innovation and technology makes it a perfect fit for Sandbox VR," said Steve Zhao, CEO and founder of Sandbox VR, in a statement. "The city's diverse, tech-savvy population and strong entertainment culture create an ideal environment for our immersive VR experiences. LOL Entertainment continues to exceed our expectations as a partner, and we're excited to bring our cutting-edge virtual reality gaming to Texas's largest city."

The new gaming center opens Friday, January 23 at 797 Sorella Court in CityCentre.

One of the games that stands out is the Stranger Things: Catalyst game, based on the blockbuster Netflix television series. Groups of one to six players will be dropped into the sinister Hawkins Lab and the mysterious Upside Down to fight Demogorgons and other monsters. The game features Matthew Modine reprising his role as Dr. Martin "Papa" Brenner, who imbues players with psychic powers.

Other games include the supernatural pirate title The Curse of Davy Jones and other Netflix tie-ins based on Zack Snyder's Rebel Moon and Squid Game. Sandbox VR offers fully-immersive group play activities that range from combat to puzzle solving for a variety of age groups.

The opening of Sandbox VR is another part of the expansion of LOL Entertainment, who touts itself as one of the pre-eminent hosts of immersive and gaming experiences in the U.S. Sandbox VR will be their first entry into the Houston market, with another immersive group adventure game, Time Mission, set to open at the the Marq'E Entertainment District later this year.

“Bringing Sandbox VR to CityCentre Houston is a big milestone for LOL Entertainment, for Sandbox VR, and for this market,” said Rob Cooper, CEO of LOL Entertainment. “Houston is a fast-growing, experience-driven city, and we’re excited to give locals and visitors a truly immersive, social gaming destination that you can’t replicate anywhere.”

Presale tickets for the grand opening of Sandbox VR are available here. Standard pricing is $55-$65 per event, but Sandbox VR is running a special for 30 percent off with code OPEN30 for those who purchase before Thursday, January 22. Presale buyers are also entered into a drawing for free Sandbox VR for one year.

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This article originally appeared on CultureMap.com.

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