Data Centers Are Red-Hot, But They Are Increasingly Facing A Much More Hostile Local Landscape

Local resistance to new data centers is on the rise — and industry insiders tell Bisnow that developers need to start paying attention. 

In recent months, opposition to data centers has made headlines in communities across the U.S. From two cities in Arizona to a pair of towns in Connecticut to rural communities in Virginia and Oregon, local governments and community groups have sought to block or curb data center development.

NIMBYism is nothing new, but this wave of resistance in emerging data center markets is a trend that has industry professionals taking notice.  

As the footprint of digital infrastructure in the U.S. expands and decentralizes, and as data centers — and their potential local impacts — go from obscurity to a growing presence in the public consciousness, industry insiders say that those looking to build these facilities will need to make adjustments to account for this new political reality.  

“We're seeing it firsthand with a few clients around the country where they thought they had an inroad in very supportive cities and development authorities, but now they're getting some rabble-rousing from the local populace,” said Michael Rechtin, a partner at Seyfarth Shaw LLP who heads the firm’s Data Center Services group.

“Places that were previously supportive are now saying, 'Well, maybe we really don’t want this.'”

An inventory of the recent run of objections to data centers from local governments and community groups reflects a broad array of environmental and quality-of-life concerns that have long been associated with data centers.

In the emerging data center hub of Chandler, Arizona, the local government is considering a ban on new facilities after a flood of resident complaints about noise from cooling systems and generators. In nearby Phoenix, officials are pushing back on proposed data centers due to concerns over water usage and proposing similar moratoriums. Lack of transparency around water use was also behind the public rancor that held up approval of a Google data center in the rural Oregon community of The Dalles for months and made headlines throughout the region.  

On the East Coast, two towns in Connecticut are attempting to withdraw from an agreement with a data center developer due to a range of environmental factors and uncertainty about the financial viability of the company behind the proposals. And in Prince William County, Virginia — just a short drive from Loudoun County’s Data Center Alley — an attempt to allow data center construction in a rural community near the Manassas Civil War battlefield has sparked fierce opposition by residents and environmental groups who say data centers would permanently change the character of the rural community and tarnish the historic battlefield. 

Despite the differing motivations driving the opposition, experts tell Bisnow that this seeming surge in organized resistance reflects a growing trend.

Digital transformation and the seemingly endless global appetite for data processing and storage means more data centers in more places, while the general decentralization of digital infrastructure — the so-called movement toward the edge — has meant the emergence of regional hubs in places like Arizona and Oregon. This means multiple data centers are suddenly springing up in communities where they may not have existed previously.

At the same time, experts point to growing public awareness of data centers and their potential impact amid the rapid digital transformation sparked by the coronavirus. Major outlets routinely run stories about the massive amounts of water and power consumed by data centers or the carbon footprint of data.

The data center industry used to talk about “security by obscurity.”

Now, Rechtin said, citizens and activist groups have more of an awareness of what data centers are and their potential impact, whether real or perceived, on the environment or local quality of life. 

“Before, if you were going into a place where there weren’t already data centers, you would hear, 'We don’t really know what that is, but we know we want it,'” Rechtin told Bisnow.

"Now you get, 'We kind of know what that is, and maybe we don’t want it here.' Communities are getting more sophisticated and more savvy about this — they know what a data center is and know that it’s not roses all the time.”  

Adam Waitkunas agrees. The president of Milldam PR, a Boston-based communications firm, focuses on data centers and digital infrastructure.

Waitkunas said the industry as a whole has done a poor job of messaging to the public at large and has failed to get out in front of negative narratives. He worries that people are only learning what data centers are in the context of their environmental impacts or as a branch of “big tech.”

“The focus has always been on educating within the industry, whether it be about efficiency or best building practices, avoiding downtime and that sort of thing,” Waitkunas said.

“But communication on behalf of the industry as a whole hasn't gone beyond this to educate communities on the benefits of data centers or show the important role they’ve played over the past two years in making sure everyone could continue to communicate and be productive," he said.

Waitkunas said data center developers should expect local opposition going forward and need to plan accordingly — namely by prioritizing community outreach and anticipating specific community objections.

Developers are going to have to show face in neighborhoods where they plan to build, he said, and need to have a solid knowledge of what the area’s objections to the project will be before the public process begins. An affluent bedroom community might be concerned about noise, while a working-class town might be more worried about how many jobs will be created. 

“Community relations is going to have to be the new normal for the data center industry because, especially with the development of the edge, it’s going to be nonstop data center growth,” he said.

Developers will need to account for the growing frequency of organized opposition to data centers by changing more than just their communication strategy, according to Seyfarth’s Rechtin. The added cost and time created by local pushback — not to mention the risk that the project will be rejected — mean that the local political climate will become an increasingly important factor when it comes to siting future facilities. 

Rechtin said he believes this will reshape the data center map, incentivizing data centers in rural, agricultural areas, even if it means having to spend more money to build out the fiber and power infrastructure needed to place them there. 

“You're going to have to be more open to putting data centers in more remote farmland-type areas, with the understanding you’ll have to create the connections to get to them,” he said. “But you have a lot of good potential avenues through the infrastructure bill to make that happen, and it’s going to be a lot less expensive to buy that land and build there.”