Data centers have become one of the most important real estate asset classes in the global economy. According to a PwC study released in 2025, government revenues associated with the sector grew from $66 billion in 2017 to more than $162 billion in 2023. The growth trajectory appears far from over. Last year, JLL's Head of U.S. Data Center Research projected that North America could see as much as $1 trillion of new data center development during the second half of this decade.

Artificial intelligence, cloud computing, digital transformation initiatives, and the growing need for data storage continue to drive unprecedented demand. Yet as development and tenant demand accelerate, power accessibility and how this challenge is addressed by stakeholders is upending the site selection map.

Increasingly, the most attractive markets are not simply those with available land or fiber connectivity, but those capable of delivering power at scale while aligning stakeholders around long-term infrastructure planning.

The Evolution of Data Center Power Demand

Jim Kerrigan, SIOR, Managing Principal of North American Data Centers, has spent more than three decades advising data center owners and occupiers. He notes that power has always been central to site selection decisions, but the industry's requirements have accelerated dramatically over the last two decades.

"The business changed in the late 2000s when, following mergers among several major data center-focused property owners, you started to see more turnkey-ready data center space marketed," says Kerrigan. "From there, tenant power requirements ramped up in the early 2010s with the growth of public cloud companies and again in the early 2020s with the AI boom."

Kerrigan notes the numbers illustrate this transformation. Traditional enterprise data center users often required 5 to 7 kilowatts per cabinet. Public cloud adoption pushed expectations to 12 to 14 kilowatts. Today, AI-driven deployments can require anywhere from 50 to 250 kilowatts per cabinet, fundamentally changing infrastructure needs and development economics.

With U.S. data center power demand projected to rise from roughly 26 GW to 80 GW by 2030, according to McKinsey, and 27% of facilities expected to incorporate onsite power generation by the end of the decade, according to Bloom Energy, securing reliable electricity is becoming an increasingly complex and costly component of the development process.

Historically, markets such as Northern Virginia, Silicon Valley, Chicago, Atlanta, Dallas and Columbus have served as hubs for data center industry leaders due to a combination of reliable utility infrastructure, extensive fiber networks, favorable business conditions, and proximity to major population centers. However, growing power demands and changing stakeholder priorities are reshaping the competitive landscape.

Success Creates New Challenges

Earlier this decade Columbus, Ohio, emerged as one of North America's fastest-growing data center markets, attracting major investments from Amazon Web Services, Google, Meta, and Microsoft. Yet that success has created new challenges. According to reports filed in Ohio utility proceedings, data center electricity demand in Central Ohio could increase from roughly 600 megawatts in 2024 to as much as 5,000 megawatts by 2030, requiring significant investment in new infrastructure.

The rapid growth has fueled debate over who should bear the cost of grid upgrades, leading regulators to approve new tariff structures designed to ensure hyperscale users shoulder a greater share of infrastructure expenses. Ohio policymakers have also begun reevaluating incentive programs and development regulations amid concerns about fiscal impacts and long-term infrastructure requirements. This Spring, Ohio Governor Mike DeWine paused consideration of new data center tax exemption applications while lawmakers study the industry's broader effects on Ohio communities and energy systems. Elsewhere in the State, organizers are collecting signatures to get a ban on the November ballot on building data centers with a peak load of more than 25 megawatts per month.

Moving east to Northern Virginia, the mature market is confronting similar growth constraints. For decades, Loudoun County's "Data Center Alley" served as the industry's epicenter. Today, unprecedented power requirements are straining transmission systems and requiring billions of dollars in utility investment. Local governments have adopted stricter review standards as residents raise concerns about noise, visual impacts, and land use, while developers face longer timelines associated with utility interconnections and entitlement approvals.

Even emerging markets are beginning to grapple with similar questions. In Maine, policymakers and local communities have debated how large-scale data center development could affect electric grids, utility costs and environmental resources before the market reaches significant scale. A bill that would have halted the construction of large data centers in the state for 18 months made it through the state house to the governor’s desk but was vetoed in April. The discussion highlights a broader trend: communities increasingly want assurances that economic benefits outweigh infrastructure and environmental impacts.

Markets Positioned for Growth

While some regions face growing constraints, others have successfully elevated their profile by taking a proactive approach to infrastructure planning and stakeholder coordination.

Indiana offers a combination of available power capacity, lower land costs, a business-friendly regulatory environment, and a central location within the nation's fiber and transportation networks that is attracting major data center occupiers. Specifically, the state offers qualifying data center operators sales and use tax exemptions on equipment and energy purchases for up to 50 years on projects exceeding $750 million in capital investment. In 2024, Amazon Web Services announced plans to invest $11 billion in a new hyperscale campus in New Carlisle—the largest planned capital investment in Indiana history at the time—and followed that commitment in late 2025 with an additional $15 billion investment in Northern Indiana data center campuses. In early 2026, Meta broke ground on a $10 billion, 1-gigawatt data center campus in Lebanon, Indiana, further validating the state's emergence as a major digital infrastructure market. State and local officials have complemented these investments with infrastructure planning and utility coordination efforts designed to accommodate future growth.

Phoenix has also emerged as one of the industry's standout success stories. The market's combination of available land, expanding utility infrastructure, and coordinated economic development efforts has attracted significant investment from hyperscale operators including Google, Microsoft, and Meta. Utility providers, local governments, and developers have worked together to identify growth corridors and expand capacity ahead of anticipated demand, enabling the region to compete effectively for large-scale projects.

Finally, Reno has become an increasingly attractive option for operators seeking alternatives to more constrained Western markets. Nevada's favorable tax environment, abundant land availability, and proximity to major West Coast population centers have helped attract investment from Google, Apple, and Switch. The market also benefits from comparatively streamlined development processes and growing renewable energy resources, allowing developers to advance projects more quickly than in some traditional coastal markets.

The Broker's Expanding Role

As data center development becomes more infrastructure-driven, commercial real estate brokers are serving a broader advisory role.

The most valuable sites today are not necessarily those with the lowest acquisition cost, but those with a realistic path to power delivery and entitlement approval. Brokers increasingly help clients evaluate utility infrastructure, assess substation capacity, understand local regulatory environments, and identify potential obstacles before capital is committed.

Equally important, brokers often serve as connectors among the numerous stakeholders involved in the development process. Successful projects frequently require coordination among utility providers, municipalities, economic development agencies, landowners, engineers, and occupiers. Experienced advisors can help facilitate these conversations early, reducing uncertainty and helping clients better understand realistic timelines and development costs.

Many brokers are also utilizing new data platforms to identify jurisdictions that can support modern data center workloads. Zoneomics, for example, standardizes zoning classifications, permitted uses, building controls, and special-permit requirements across more than 25,000 U.S. cities, helping brokers and developers screen entire markets for hyperscale-compatible parcels and surface land-use restrictions that increasingly determine whether a site can clear entitlement.

In many respects, data center site selection has evolved beyond a traditional real estate transaction. It is increasingly an infrastructure and stakeholder management exercise where access to power, regulatory certainty, and community support can determine project viability.

Looking Ahead

Despite these challenges, the long-term outlook for the sector remains exceptionally strong. For commercial real estate professionals, the opportunity lies in understanding how the industry is evolving. The next generation of winning markets will likely be those that successfully balance power availability, infrastructure investment, regulatory predictability, and community support. As that shift unfolds, brokers who can navigate the increasingly complex intersection of real estate, utilities, and public policy will play an essential role in shaping where the digital economy grows next.