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Ext. PublicationWhat the Data Center Boom Means for Property Owners
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Data Center Growth and Market Dynamics
The pace of data center development in the U.S. is testing the limits of infrastructure planning, public policy and market assumptions. Demand continues to surge, driven by cloud computing, artificial intelligence (AI) and enterprise digitization, yet the systems required to support that growth are showing signs of strain.
Across major North American markets, operational data center capacity now exceeds 8,000 megawatts, with vacancy at or near historic lows. Much of the capacity expected to deliver over the next year has already been preleased, leaving little margin for delays related to permitting, increased production, power procurement or interconnection. Construction spending has accelerated sharply over the past two years, and industry forecasts suggest further increases ahead.
The question facing the market is less about whether demand exists and more about whether new capacity can be delivered under evolving constraints.
Economic and Infrastructure Impacts
The economic benefits of data center development are real. Large-scale campuses generate sustained construction activity, supporting skilled labor, engineering firms and a specialized supply chain that includes electrical infrastructure, thermal systems and backup generation. In many regions, data center growth has catalyzed long-deferred investments in transmission and grid modernization. For municipalities, fully built campuses can contribute meaningfully to the tax base over time.
At the same time, the sector’s resource intensity is drawing increased scrutiny. Data centers are estimated to account for approximately 4.4% of U.S. electricity consumption today, and recent analyses from the Department of Energy and Lawrence Berkeley National Laboratory suggest that share could rise to between roughly 6.7% and 12% by 2028, depending on the pace of AI deployment, efficiency improvements and grid investment.
While projections vary widely, even the lower end of this range points to a meaningful increase in demand concentration. Grid operators and utilities are confronting the challenge of serving concentrated, high-load users while maintaining reliability for existing customers. As a result, questions around cost allocation are moving beyond technical discussions and into public and legislative arenas.
Legislative actions highlight the pressure on local grids
Texas provides a recent and instructive example of how policy is beginning to respond. In August 2023, the Electric Reliability Council of Texas, Inc. (ERCOT) recorded a peak system demand of 85.5 gigawatts, underscoring the scale of the grid at the time. In the months that followed, pressure intensified rapidly. By September 2024, ERCOT was tracking 56 gigawatts of large-load interconnection requests, a figure that has since climbed to approximately 205 gigawatts. While interconnection requests do not guarantee construction, the magnitude of these requests highlighted growing concerns that demand was beginning to outpace transmission planning and expose ratepayers to cost and reliability risks.
These conditions ultimately led to legislative action in 2025 when Texas enacted Senate Bill 6 to formalize new requirements for large-load interconnection, cost responsibility and grid coordination. Together, these developments signal a shift away from implicitly socializing infrastructure investments associated with hyperscale growth and toward clearer accountability for how large users integrate into the system.
For developers, property owners and operators, the implications are material. Power-related costs are increasingly embedded in upfront capital planning rather than treated as variable operating expenses. In addition to the building itself, projects now often include dedicated substations, feeder extensions, interconnection deposits and market-specific grid upgrades that must be funded early to secure delivery timelines. In some markets, these power-related investments now rival traditional horizontal and vertical infrastructure costs, shaping site selection, project sequencing and capital allocation decisions.
Strategies for Power, Water and Community Engagement
Rethinking power supply
These capital dynamics are also influencing how power is sourced. Large data center users are rethinking the assumption that electricity will simply be available through standard utility service. Many are combining grid interconnection with direct investments in generation to support long-term growth.
Long-term power purchase agreements (PPAs) tied to new solar and wind projects remain common, largely because they provide price certainty and support new supply. However, they are often insufficient on their own for facilities that operate continuously and at scale. As loads grow larger and more concentrated, some operators are looking for ways to secure power that is available around the clock and less vulnerable to congestion, delays or future rate volatility.
Several large technology companies are moving closer to the power system itself:
- Meta participates directly in wholesale electricity trading to support new generation and manage long-term exposure as AI-driven data center demand accelerates.
- Google’s agreement with Kairos Power to purchase electricity from small modular nuclear reactors pairs dedicated generation with expected long-term data center demand.
- Amazon’s investment in X-energy uses advanced nuclear technology to support future power needs as its data center footprint expands.
These projects are still in early stages of development with long lead timelines driven by contingencies on regulatory approval and commercial viability. Rather than signaling near-term availability, they reflect how hyperscale operators are looking beyond current procurement options to address longer-term reliability and capacity constraints.
Water use under greater scrutiny
Water use is following a similar trajectory. Cooling requirements can translate into significant daily water consumption, raising concerns in water-stressed regions and prompting closer review even in areas once considered as water secure. State and local governments are paying closer attention to transparency, sourcing and long-term impacts on municipal systems. Cooling design, once treated primarily as an engineering decision, is becoming a permitting, planning and community relations issue.
Community response shapes outcomes
Community response to data center development varies by market and by project, driven by how proposed facilities interact with existing land use patterns and local priorities. In Louisa County, Virginia, community opposition focused on water use, the compatibility of large-scale industrial facilities with existing rural land uses, and limited transparency around local impacts. Ultimately, Amazon Web Services withdrew a proposed data center project altogether. That outcome reflects how scale, siting and perceived misalignment with surrounding agricultural and low-density uses can directly affect project viability, even before infrastructure constraints become decisive.
In other markets, community scrutiny shapes the approval process rather than stopping projects outright. In Springdale, Pennsylvania, residents raised concerns during local planning and zoning meetings about noise, pollution and water consumption associated with a proposed AI data center. Those objections prompted heightened review and extended deliberation during permitting, illustrating how proximity to residential areas and operational impacts can influence timelines and approval conditions.
Elsewhere, sustained community pressure has translated into broader regulatory action. In Prince George’s County, Maryland, opposition tied to environmental, infrastructure and land-use concerns contributed to a temporary moratorium on new data center approvals, alongside calls for tighter zoning controls and oversight. While not representative of all markets, this example shows how concentrated development pressure can trigger policy responses that reshape the development landscape more broadly.
These cases demonstrate that community engagement risks depend heavily on local context. Where concerns align around land use compatibility, water availability or quality of life impacts, community scrutiny can affect timelines, design decisions, and in some cases, whether projects move forward at all. Recent calls from federal lawmakers to pause or reassess the pace of AI-driven data center expansion, regardless of their legislative prospects, reflect a notable shift in tone. The sector has moved into a phase where growth is no longer viewed solely through the lens of innovation and investment but also through its cumulative impact on shared systems.
Navigating Risk and Looking Ahead
For developers, investors and occupiers, these dynamics are reshaping risk considerations. Power availability now influences project feasibility as much as site selection or capital markets access. Water strategy carries reputational and regulatory implications. Political sentiment once considered local and episodic, is now a meaningful factor that can affect timelines and underwriting assumptions.
None of this suggests that data center development is slowing in the near term. Demand remains strong, and capital continues to flow. What is changing is the operating environment. Delivering the next generation of data centers will require closer coordination with utilities, more deliberate engagement with communities and a clearer understanding of how private investment intersects with public infrastructure.
The sector is entering a period where execution, coordination and credibility matter as much as scale. How the industry responds will shape not only where data centers are built but how they are perceived as a permanent fixture of the modern economy.
Weaver Turns Industry Shifts Into Action
Today’s data center decisions require a thoughtful approach to power sourcing, water use and stakeholder engagement. Weaver is ready to help property owners, operators and developers assess emerging pressures and plan with clarity as the landscape continues to evolve. Contact us to discuss how these trends may influence your upcoming projects or long-term strategy.
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