In the U.S., communities and politicians are pushing back against data centers—vital yet sometimes controversial facilities that underpin our digital existence and the rapid growth of AI.
More than 5,000 of these essential facilities are spread across the country, often requiring massive amounts of energy and land while benefiting from significant government incentives.
Every time you join a video call, upload photos to the cloud, game, check your bank statement, or stream your favorite TV show, you're relying on a data center.
Data Center Space is Becoming Increasingly Scarce
The data center industry is experiencing unprecedented growth and transformation, driven by the rapid adoption of artificial intelligence (AI), cloud computing, and digital transformation across various sectors. However, space in data centers is becoming increasingly scarce. For data center owners, tech giants are a double-edged sword: their insatiable demand for space fuels growth, but their immense influence enables them to negotiate aggressively on pricing.
Factors Contributing to Data Center Space Scarcity
1. Rising Demand for AI and Advanced Technologies
The adoption of AI and other advanced technologies is a primary driver of data center demand. AI workloads require substantial computational power and high-density server environments, leading to increased space requirements.
2. Hyperscaler Dominance
Tech giants, or hyperscalers, such as Amazon Web Services, Google Cloud, and Microsoft Azure, are major drivers of data center demand.
3. Limited Power Availability
Power constraints are a significant bottleneck in data center expansion. Many traditional data center hubs face challenges in expanding power infrastructure quickly enough to meet demand, limiting the construction of new facilities.
4. Regulatory and Environmental Challenges
Regulatory hurdles and environmental concerns contribute to the scarcity of data center space. In some regions, new data center developments are halted due to their impact on local power grids and environmental targets.
5. High Real Estate Costs and Limited Land Availability
The cost and availability of suitable land for data center construction are significant challenges, particularly in urban areas where land is scarce.
6. Water and Energy Consumption Concerns
Data centers are significant consumers of water and energy, raising sustainability concerns and leading to stricter regulations and limitations on new data center developments in water-stressed regions.
Atlanta Takes a Bold Stance Against Data Center Buildout
As highlighted in a recent Wall Street Journal article, Atlanta has taken a bold stance against unchecked data center expansion, sparking a pivotal moment in the ongoing debate between technological progress and urban development. This situation draws striking parallels to challenges we’ve encountered in our backyard. Platoco is based in Northern Virginia's Data Center Alley, where similar concerns have emerged.
Space to store and process data for everything people stream, scroll and swipe online is still in short supply. An artificial intelligence race among the world’s largest tech companies—the so-called “hyperscalers”—is driving a land rush for ever-larger computing facilities with plentiful power.
The AI-Driven Surge For Land
Data center construction in Atlanta is expanding at an impressive rate, outpacing nearly every other major city. According to real estate firm CBRE, power capacity in the metro area increased by 76% during the first half of 2024 compared to the same period the previous year.
The usual suspects, Meta, Alphabet’s Google, Microsoft and Elon Musk’s X all operate Atlanta area data centers, or are planning new ones. X secured a $10 million local tax break for an expansion this year.
The global race to harness artificial intelligence (AI) has dramatically fueled the demand for data center space. According to the WSJ report, “Data center construction grew 76% in the first half of 2024 compared with the same period a year earlier,” per CBRE (a global real estate service).
This surge reflects a fundamental shift in how cities must manage growth in the AI-driven era. Data centers are critical to powering AI advancements, but their rapid proliferation raises questions about their long-term impact on urban landscapes, infrastructure, and communities.
Last year, the White House ordered the Chinese owners of a Wyoming cryptomining data center near a U.S. nuclear missile base to shut down and sell the facility, citing national security, writes Axios.
Atlanta's Response
Adair Park, located just southwest of downtown Atlanta, is a neighborhood experiencing growth. It features a blend of residential and industrial areas. One type of real estate threatens to crowd out others: data centers!
A controversial ordinance that would have allowed data centers in Atlanta's Adair Park neighborhood and Historic West End District will not go ahead (read the full article in Axios here).
In response to this rapid growth and demand for more data centers, Atlanta’s leadership has taken decisive action. Mayor Andre Dickens and the city council enacted new restrictions on data center development in key areas
Dickens wrote in his letter that data centers "make it more difficult to develop affordable housing, grocery, green space, and retail, which are all more suitable projects for the urban core of our city."
As Mayor Dickens remarked in the WSJ article: “Data center development cannot be prioritized over people-centered urban development.”
His approach reflects Atlanta’s commitment to balancing technological growth with the needs of its communities, setting a precedent for how cities can regulate expansion thoughtfully.
The Northern Virginia Parallel
Atlanta’s challenges mirror those in Northern Virginia (NOVA), where Platocom is based. NOVA has earned the title of the “Data Center Capital of the U.S.”, hosting a disproportionate number of data centers in a relatively small area (in fact, NOVA houses the world's biggest collection of data centers).
Key concerns in NOVA include:
Overcrowding: Data centers now occupy over 30 million square feet of space.
Power Strain: Power consumption has reached critical levels, with data centers demanding massive amounts of energy.
Community Pushback: Residents and advocates have raised concerns about noise, environmental degradation, and the impact on local quality of life.
In Northern Virginia, some residents are advocating for regulations on what they consider noisy eyesores gobbling up land and power.
A contentious meeting last year to approve a huge data center complex in Virginia's Prince William County lasted 27 hours. Residents are suing to stop its construction.
Data centers are "driving up the price of land, and it's hard for anyone else to compete with them," says Deshundra Jefferson, chair of the Prince William Board of County Supervisors, who adds that data center pushback helped her get elected.
Virginia's Fairfax County recently greenlit regulations on data center development, requiring noise studies and that sites be located a certain distance from homes and transit stations. Nearby Loudoun County is considering similar restrictions.
Economic Impact vs. Land Use
While data centers bring undeniable economic benefits—jobs (under constructions), investments, and infrastructure improvements—they also consume vast amounts of land, water, and power, forcing cities like Atlanta (and NOVA) to reconsider how much growth is sustainable.
The WSJ highlighted some staggering figures about Atlanta’s data center boom:
By 2028, Atlanta’s data center power capacity is projected to exceed 4,000 megawatts, a thirty-fold increase from 2012 levels.
Major tech players, including Meta, Google, and Microsoft, are rapidly expanding their presence, intensifying the urgency of these discussions.
Community Perspective
Voices from Atlanta’s local communities have been pivotal in shaping the debate. Matthew Garbett of the Adair Park Neighborhood Association argues that alternative development paths, such as transforming former industrial spaces into housing and retail establishments, can better serve urban areas.
“Former industrial spaces have been successfully transformed into housing and retail establishments, showing alternative development paths.”
This perspective emphasizes the importance of prioritizing projects that align with the needs of residents while balancing technological advancement.
On A Final Note
Platocom believes that the future of urban planning lies in striking a balance between technological growth and community preservation. Atlanta’s proactive measures provide a compelling example of how cities can regulate data center development to support both economic growth and the well-being of their residents.
As NOVA continues to grapple with its own data center boom, it can learn from Atlanta’s approach, implementing policies that prioritize sustainability, transparency, and community engagement.
The ongoing dialogue between tech growth and community preservation will shape the future of cities like Atlanta and NOVA, ultimately serving as a blueprint for other regions navigating similar challenges.
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