Chicago’s Future As A Data Center Hub To Be Examined At Bisnow’s Midwest DICE Event On Sept. 19

While Northern Virginia, Dallas and the San Francisco Bay Area are top data center markets in the U.S., the Midwest, particularly Chicago, is attracting more development because of its central location and reliable power supply.

More than $4.2B has been invested in the Windy City since 2019 by companies attracted by its energy infrastructure and tax incentives. CloudHQ, Microsoft and Meta are among the companies pursuing massive data center projects in the Chicago region.

Law firm Greenberg Traurig believes there is even more potential in the region that remains untapped.

“As data center capacity continues to expand, we’re seeing significant investment in developing hubs like Chicago and the Midwest region,” Greenberg Traurig attorney and shareholder Melissa Vandewater said. 

Vandewater will be sharing her expertise on a panel at Bisnow’s DICE Midwest event at the Hyatt Lodge Oak Brook Chicago on Sept. 19. She will join thought leaders on a panel discussing site selection, permitting and fiber build-outs. Click here for more information.

Bisnow spoke with Vandewater about data center trends she is seeing in Chicago, how power availability will be more important in the site selection process, and the role of generative AI in future build-outs. 

Bisnow: What data center trends are you seeing in Chicago?

Vandewater: The area continues to attract substantial interest and investment because of the availability of power, existing infrastructure and connectivity, and governmental support, including attractive tax incentives. Those factors are driving investment by data center operators and hyperscalers in the city and beyond.

Bisnow: What do you think will be the hot topic at the event?  

Vandewater: Generative AI is going to always be at the top of everyone's mind. We've got a new quantum computing campus that was just announced, which is driving some excitement in Chicago around investment in this form of AI and the need for forward-thinking computing space.

Furthermore, I feel there will be a discussion about how members of the Chicago community can work together to find more investment opportunities and create jobs while being environmentally responsible and a leader in the industry. 

Bisnow: How is power availability going to play a greater role in site selection?

Vandewater: Owners and operators need to be prepared from a diligence, construction and financing perspective so that they're able to efficiently evaluate potential sites and make investment decisions in this competitive market in a timely manner. 

As part of site diligence, data center operators need to understand local construction and permitting requirements and establish relationships with local governmental authorities and the surrounding community. Power availability will be a paramount consideration in site selection, particularly with the expansion of generative AI. While it'll help streamline daily operations, we still need to find a way to utilize it more efficiently due to its enormous energy consumption.

We advise our clients to try to secure power commitments during diligence periods under their purchase agreements and also to try to allocate power availability risk in agreements with their customers to help safeguard against deadline delays.

Bisnow: How are you advising your data center clients regarding regulatory considerations and tax incentives?

Vandewater: Given the substantial capital and time investment that's needed for data center development, any developer, owner or operator must be diligent on the front end of the site acquisition process. We advise our clients to not only understand the property-level diligence — such as environmental conditions, potential wetland mitigation, title and use restrictions — but also the current and potential regulatory environment and the public sentiment towards potential data center development. 

We also advise our clients to negotiate for time to secure power and utility commitments and necessary entitlements. They need to understand the timing and process required to achieve rezoning, including any appeal periods that might be available and whether the public has the right to appeal the project. We also want our clients to consider potential impediments to timely delivery of build-outs, such as permitting delays, and we try to find ways to mitigate those risks. 

On the regulatory end, we've seen a variety of state legislatures introducing possible legislation aimed at regulating artificial intelligence. In Illinois, we have a privacy law known as the Illinois Biometric Information Privacy Act, which has been subject to widespread litigation, including against hyperscalers' use of facial recognition technology to collect and store data. 

Bisnow: What do you see for the future of data center site selection in Chicago and the Midwest? 

Vandewater: The fundamentals of site selection are unlikely to change. The markets with available power and land will continue to attract data center business, and the global power constraints will likely remain a primary concern with site selection. 

I think generative AI will continue to play a prominent role in driving data center demand and construction as owners and operators look for data center locations in different markets and find ways to be more cost-effective.

Click here for more details about the event. 

This article was produced in collaboration between Studio B and Greenberg Traurig. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.