If you’ve followed local politics and news for the past couple of years, you’ve probably noticed data centers appearing as a flashpoint in county commission meetings, state legislatures, and community social media groups. The arguments on both sides have grown louder, and the scale of these builds justifies the noise.
Over 4,000 data centers have opened across the U.S., with heavy concentrations in Virginia, Texas, and California. Another 3,000 more are planned or under construction. The industry’s supporters frame them as essential infrastructure. The critics frame them as extraction and harmful to the environment. Both sides are drawing on concrete evidence to support their claims, making the data center conundrum hard to sort out.
The purpose of data centers
A data center is, in the most literal sense, a building full of servers. When you run a search, stream video, access a hospital’s electronic health records, process a bank transaction, back up a phone photo, or update your car’s technology, you’re touching a data center.
Our economy relies on this infrastructure. The centers are the physical layer beneath nearly every digital service, and without the scale we’re seeing built now, the generative AI tools weaving into everything from drug discovery to customer service (like chatbots) couldn’t exist.
Facilities generating the most controversy are hyperscale centers: ginormous operations run by companies like Google, Meta, and Amazon to power AI, cloud computing, and online services. The standard definition of hyperscale is 10,000 ft2+ and over 5,000 servers, yet that benchmark has become increasingly insufficient. A project planned near Ann Arbor, MI, for example — part of OpenAI’s Stargate Initiative — is slated for over 2 million ft2 and 1.5 gigawatts of energy. That’s roughly equivalent to the electricity used by one million households.
The economic case
Numbers don’t lie, and those attached to data center growth are astronomical. Deals (with most in the U.S.) reached a record $61 billion globally in 2025. Meta committed $27 billion to its LA-based Hyperion data center. Google recently announced $25 billion in AI infrastructure investments in Pennsylvania. According to S&P Global’s economic analysis, data center and related high-tech spending accounted for about 80% of the increase in U.S. economic demand in H1 2025.
Loudoun County, VA. officials said data center tax revenues approached $895 million in FY 2025 against a total county operating budget of $940 million. Nope, not a rounding error — those revenues are essentially funding the county.
You can’t deny the appeal for rural areas competing for investment. Proponents argue that data centers provide significant economic benefits through:
- Job creation
- Tax revenue
- Infrastructure improvements, like better broadband access
And the infrastructure angle has some substance. A new hyperscale facility typically requires substantial grid updates, new substations, and fiber networks that can benefit surrounding businesses and residents. But the distribution of those benefits isn’t necessarily automatic.
On jobs, the picture splits between construction and operations. Construction? Real and substantial. Meta’s Louisiana project projected over 5,000 peak construction jobs. OpenAI’s Starget initiative cites the potential for 100,000 jobs across construction and operations. Microsoft President Brad Smith has estimated the U.S. will need about 500,000 new electricians in the next decade to meet demand.
But once a data center is running, it requires a few people — maybe 20 to 50 total staff — because it’s a warehouse of servers. It doesn’t need managers or engineers. Ohio data centers employ fewer than 150 permanent workers. While the construction boom is real, what happens when the build is finished? Data center supporters tend to overstate the permanent employment promise, and that’s a problem.
Widespread abatements can also complicate tax revenue. Virginia and Georgia have forgone more than $1 billion in data center tax breaks in the past year. Texas will lose an estimated $3.2 billion in tax revenue over the next couple of years thanks to incentives. More states offer similar incentives. Whether those deals net out favorably depends on which costs get counted (and for how long) — a question that deserves more rigorous public accounting than it typically receives.
Energy and the grid
The stakes (and voices) grow loudest here — and once again, both sides make valid points.
The proponents
Industry advocates note that data centers serve as large, predictable baseload customers that can stabilize utility planning and help spread infrastructure costs. Some participate in demand-response programs, switching to on-site backup generation during peak grid stress to relieve load.
The U.S. government’s current and previous administrations have framed domestic AI infrastructure as a national security priority. There’s a real geopolitical argument for keeping critical data processing on American soil rather than relying on foreign entities.
The detractors
The aggregate energy trajectory is hard to minimize. It won’t be long before data center electricity demand contributes to 4.6%-9.1% of total global consumption. A Carnegie Mellon and North Carolina State University study projected that U.S. electricity rates could increase by an average of 8% by 2030 as a direct result of data center demand, with high-concentration areas like Northern VA facing increases exceeding 25%. The North American Electric Reliability Corporation has also warned that the pace of large-load construction is adding measurable stress to the grid.
Local rate impacts differ greatly from the national average. Nationally, residential electricity rates increased by 5.2% in 2024, but Bloomberg’s analysis found that areas with significant data center activity saw increases of up to 267% over a five-year span. That increase is huge for families living in those communities.
Water
The water debate is similar. National patterns raise less alarm than local numbers. According to some metrics, data centers are very water-efficient facilities. According to others, they endanger a community’s water supply.
For example, Google’s data centers withdrew 6.1 billion gallons of water in 2023. Two facilities in Council Bluffs, IA, pulled an estimated 1.4 billion gallons from the local supply. Texas data centers could theoretically need over 160 billion gallons annually by 2030 — nearly 3% of the state’s water usage in a stage already facing recurring drought.
A medium-sized facility can consume 110 million gallons per year for cooling. Larger centers can reach 5 million gallons per day. These national averages tell you very little about what’s happening to a specific watershed.
Community burden
Communities already disadvantaged by underinvestment and pollution exposure are home to over 1,200 data centers (20% of existing facilities). Those stats are far from abstract to the people living there.
In addition to air, water, and electricity costs, data centers are noisy. Cooling centers run 24/7, and diesel backup generators, which can number in the hundreds for hyperscale facilities, need periodic testing. Reported noise levels from cooling fans can reach 92-96 dB(A). There’s also a significant and underreported e-waste problem: AI hardware becomes obsolete quickly, generating large volumes of electronics containing toxic materials that require careful disposal.
In January 2026, the EPA announced that for 18+ months, xAI exploited a regulatory gap and operated methane-powered turbines at its Memphis data center without air quality permits. According to research by the Alliance for Civic Engagement, data centers could contribute to 1,300 premature deaths annually by 2030. Who will bear a disproportionate share? Disadvantaged communities.
Who’s pushing back — and why it’s not simple
Analyses of elected officials publicly opposing large data center projects found a 55% Republican and 45% Democratic split. Democrats lead with environmental and health concerns; Republicans with opposition to corporate tax abatements and local autonomy.
Both are showing up at the same meetings. Over the past two years, community opposition has blocked an estimated $64 billion in data center projects.
Ben Green, assistant professor at the University of Michigan and faculty associate at Harvard’s Berkman Klein Center, said that communities are organizing effectively against some of the world’s wealthiest companies, and local resistance has blocked or substantially modified many projects.
Some companies are responding. Microsoft announced a voluntary community-first initiative, committing to:
- Offset electricity rate impacts
- Replenish more water than consumed
- Prioritize local hiring
- Contribute to local tax bases for schools and hospitals
While voluntary pledges aren’t binding requirements, they do signal that the industry recognizes the backlash created by maintaining the status quo.
Where the debate stands now
U.S. data center computing capacity could jump nearly 1,000% if all currently planned projects go live. Texas utility providers project that data centers will need more than 86 gigawatts of power by 2031 (equivalent to the state’s current peak energy use).
The world needs infrastructure. Data centers’ economic benefits are legit in some areas, but also overpromised in others. Also real and unevenly distributed? The costs to anyone who pays for electricity, water supplies themselves, and certain communities, especially those that are already disadvantaged.
This debate should not be presented as one between those who support progress and those who don’t. What should concern everyone is who should bear the cost of infrastructure that benefits everyone. We should question whether agreed-upon deals reflect those costs and, perhaps most importantly, confirm that communities have the opportunity to provide meaningful input before trees are razed and concrete is poured.
All stakeholders should ask these questions, regardless of their position on the AI data center debate.
Are you a commercial real estate investor or seeking a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United, an organization of CRE professionals from over 90 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.
