Will Data Centers Transform Infrastructure Development?

Data centers have evolved from being an afterthought in urban planning conversations — tucked away in industrial parks, invisible to most people, and relevant only to IT departments and network engineers — to becoming essential components of modern infrastructure. As digital infrastructure becomes as crucial as roads and water systems, data centers are compelling cities, developers, and infrastructure investors to fundamentally rethink land use, power distribution, and the definition of "critical infrastructure."

The signals are everywhere. Mixed-use redevelopment projects are now fielding data center proposals alongside distribution hubs. The I-X Center in Cleveland — a massive former trade show and events complex — reportedly explored a data center component as part of its redevelopment vision, alongside logistics and distribution uses tied to developers like Scannell Properties, which builds extensively for Amazon. That kind of co-location thinking, pairing hyperscale computing with last-mile distribution, would have seemed unusual a decade ago. Now it reflects a broader truth: data centers are becoming anchor tenants in the infrastructure ecosystem, not just occupants of it.

The Role of Data Centers in Modern Infrastructure

Strip away the technical jargon, and a data center is, at its core, a power-hungry real estate play. A hyperscale facility can consume anywhere from 20 to 100+ megawatts of electricity — enough to power tens of thousands of homes. That power demand doesn't just affect utility planning; it reshapes zoning conversations, transmission line investments, and municipal revenue projections.

Urban planners have historically viewed data centers as nuisance uses: low job density, high utility burden, and minimal foot traffic. That calculus is shifting. As cities compete for technology investment and the tax base that comes with it, data centers are being repositioned as economic anchors. Northern Virginia's Loudoun County — the undisputed global capital of data center development — generates hundreds of millions annually in tax revenue from facilities that most residents will never see or think about.

The infrastructure footprint of a major data center rivals that of a small industrial campus, but with a fraction of the truck traffic and none of the environmental permitting headaches associated with heavy manufacturing.

That makes them attractive to municipalities that want economic activity without the friction. The trade-off, increasingly, is power infrastructure strain and water consumption for cooling — two constraints that are now central to any serious site selection process.

Key Factors in Data Center Location Selection

Data center location selection is not a simple optimization problem. It's a multi-variable negotiation between physical constraints, regulatory environments, and long-term operational risk.

Power availability is the first filter — and the one that kills the most deals. A site might check every other box and still be unusable if the local utility can't deliver reliable, scalable power within a developer's construction timeline. Interconnection queues in many markets now stretch years, which means the land under consideration today may not be operationally viable until the late 2020s. Developers who understand this dynamic are getting ahead of it by securing land near existing high-voltage transmission infrastructure or in markets where utilities have proactively invested in grid capacity.

Fiber connectivity is the second constraint. Data centers need redundant, low-latency connections to major internet exchange points. This is why so many facilities cluster around specific corridors — not because developers lack imagination, but because the economics of network latency are unforgiving.

Beyond the technical requirements, the regulatory and tax environment of a given jurisdiction can be worth hundreds of millions of dollars over a facility's operational life. States like Virginia, Georgia, and Texas have built substantial data center pipelines partly by offering meaningful tax incentives on equipment and construction. Site selectors know this, and municipalities that haven't developed a coherent data center policy are increasingly finding themselves out of the conversation.

Water access for cooling is becoming a more prominent concern as hyperscale campuses scale up. Evaporative cooling systems can consume millions of gallons per day, putting data center operators in direct tension with agricultural water users and drought-affected communities — a conflict that's already playing out in the American West and parts of Europe.

Economic Implications of Data Center Development

The job creation narrative around data centers is complicated, and honest analysis requires grappling with that complexity. A 500,000-square-foot data center might employ 50 to 150 people full-time. Compared to a manufacturing facility of similar footprint, that's a thin direct employment base.

But the construction phase tells a different story. Large-scale data center builds generate thousands of construction jobs — electricians, ironworkers, mechanical contractors — often sustaining local trades for 18 to 36 months. The ancillary economic activity is real: procurement of local materials, subcontractor work, and the multiplier effect of construction wages moving through a regional economy.

The longer-term economic case rests less on headcount and more on tax revenue, utility spending, and the signal a major technology investment sends to other capital allocators.

When Amazon, Google, or Microsoft announces a major data center campus, the downstream effect on regional perception can attract secondary development — from housing to service businesses — that wouldn't otherwise materialize. It's infrastructure investment as economic credentialing.

Case Studies: What Successful Developments Actually Look Like

The Loudoun County model remains the clearest proof of concept, but it's also a cautionary tale about concentration risk. Roughly 70% of the world's internet traffic passes through data centers in a single Virginia county. That level of clustering creates resilience vulnerabilities that the industry is actively working to address through geographic diversification.

The more instructive examples may be in secondary markets — places like Columbus, Ohio; Des Moines, Iowa; and the Carolinas — where developers have successfully made the case for new data center investment based on competitive power costs, available land, and proactive utility partnerships. These markets didn't wait for hyperscalers to come knocking; they built the regulatory framework and infrastructure readiness that made selection logical.

The I-X Center redevelopment context in Cleveland illustrates a different dynamic: the adaptive reuse opportunity. Large legacy structures — former industrial facilities, trade centers, and big-box retail — represent an underexplored frontier for data center development. The bones of these buildings often include heavy electrical infrastructure, high floor-to-ceiling clearance, and robust structural load capacity. Retrofitting them is not always cheaper than greenfield development, but the urban land access and existing utility connections can offset those costs in the right market.

Future Trends in Data Center Infrastructure

Two forces are reshaping data center development strategy simultaneously, and they pull in somewhat opposite directions.

The first is the push toward edge computing — smaller, distributed facilities positioned closer to end users to reduce latency for applications like autonomous vehicles, real-time industrial monitoring, and augmented reality. This trend democratizes data center geography, making mid-sized cities and even rural areas relevant in ways they weren't when hyperscale consolidation dominated the conversation.

The second force is the continued concentration of AI training workloads in massive, power-intensive campuses. Training large language models requires thousands of GPUs running continuously for weeks or months, which demands the kind of stable, high-density power that only purpose-built hyperscale facilities can reliably deliver. These two trends will coexist, but they require completely different site selection criteria and infrastructure investment profiles.

Sustainability is moving from marketing language to procurement requirement. Major cloud providers have made public commitments to operate on 24/7 carbon-free energy by 2030, which is forcing data center developers to get serious about co-locating with renewable generation or securing long-term power purchase agreements with wind and solar projects. This creates a direct link between data center land development and the clean energy buildout — two sectors that infrastructure investors would be wise to evaluate together rather than in separate silos.

The developers and municipalities that will capture the next wave of data center investment are the ones treating it as an infrastructure problem, not a real estate transaction. That means proactive grid investment, water management planning, zoning clarity, and a genuine understanding of what hyperscale operators need before they need to ask. The window to position ahead of demand is narrowing — and in infrastructure development, the best deals are almost always made before the headline announcements.

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[INTERNAL LINK: site selection criteria]