Are Data Centers Driving Local Development Forward?

When researchers from the Center for Economic Development Studies (CEDS) knocked on doors near 33 data centers across 25 states in 2025, they weren't sure what they'd find. Angry neighbors? Enthusiastic boosters? The answer, as it turns out, was far more complicated — and far more interesting — than either camp expected.

The results challenge some long-held assumptions about how communities absorb these facilities and what residents actually want from the companies building them.

What a Data Center Actually Means for a ZIP Code

A data center is, at its core, a warehouse full of servers — climate-controlled, power-hungry, and increasingly essential to the digital infrastructure that runs everything from cloud storage to AI model training. They don't employ thousands of people on-site. They don't generate foot traffic. They often sit behind fences with minimal signage, humming quietly at the edge of industrial zones.

And yet, their footprint — economic, environmental, infrastructural — is anything but quiet.

The facilities themselves may be invisible to most residents, but their effects ripple outward in ways that touch power grids, tax rolls, road networks, and water systems. Understanding those ripple effects is exactly what the CEDS survey set out to do — not through corporate press releases or municipal filings, but through the people who actually live nearby.

Survey Insights: What Residents Really Think

The CEDS survey covered communities adjacent to 33 data centers spanning 25 states — a geographic spread that matters. A data center in rural Virginia horse country hits differently than one in an outer-ring suburb of Phoenix. Local economies, labor markets, and political cultures shape how residents interpret the same physical facility in entirely different ways.

What emerged from the survey wasn't a clean narrative. Residents weren't uniformly delighted or uniformly alarmed. Opinion clustered around a few consistent themes, but with meaningful variation depending on the community's economic baseline before the facility arrived.

In areas where development had been stagnant, residents were notably more positive — even when they acknowledged real concerns about noise, water use, or traffic. The calculus was simple: something beats nothing. In more prosperous communities, where residents had more to lose and less to gain economically, skepticism ran higher and tolerance for disruption was lower.

This isn't surprising to anyone who's spent time in rural economic development. But it's a crucial nuance that often gets flattened in national coverage of the data center boom, which tends to treat community response as monolithic.

Economic Impacts: More Than Just Jobs

The jobs argument is usually the first one data center developers reach for in public hearings — and it's also the first one local skeptics challenge. A modern hyperscale facility might employ 50 to 200 permanent workers. For a large capital expenditure (some facilities top $500 million or more in construction costs), that's a thin employment multiplier compared to a manufacturing plant.

But the job-count framing misses the broader picture.

Property tax revenue is often the more significant immediate impact. A large data center can generate millions in annual property taxes, directly funding schools, fire departments, and local services — without requiring the kind of social infrastructure (schools, healthcare, housing) that a large residential influx demands. It's closer to a commercial anchor than a population driver.

Infrastructure investment tells a similar story. Data centers require reliable high-capacity power and fiber connectivity. In many rural and semi-rural areas where these facilities are increasingly landing — drawn by cheaper land, available power, and state tax incentives — they sometimes fund grid upgrades and fiber buildouts that the surrounding community then benefits from. A fiber line laid for a data center's operational needs doesn't disappear when it reaches the fence line; in several documented cases, it has become the foundation for broader rural broadband expansion.

Construction spending, meanwhile, can be substantial in local economies. A facility that costs $300–600 million to build will spend a significant portion of that with regional contractors, suppliers, and trades — a one-time but meaningful injection into local economies.

The Concerns Are Real — and Deserve Honest Answers

None of this means the concerns residents raised in the CEDS survey should be dismissed as NIMBYism. They shouldn't be.

Power consumption is the most credible and least-discussed challenge. A large data center can consume 50 to 100+ megawatts of electricity continuously — the equivalent of tens of thousands of homes. When multiple facilities cluster in the same utility territory (as they have in Northern Virginia, where data centers now consume roughly 25% of Dominion Energy's load), they create genuine pressure on grid reliability and can affect electricity rates for everyone else on the system. Residents living near these facilities didn't choose to become neighbors to one of the largest industrial electricity consumers in history.

Water use is similarly significant. Many data centers use evaporative cooling systems that can consume millions of gallons per day. In water-stressed regions — and increasingly, data center developers are looking at the Sun Belt and Mountain West — this creates legitimate competition with agricultural and municipal water supplies.

Infrastructure strain shows up in subtler ways too. Heavy construction traffic on roads not built for it. Noise from cooling systems that operate around the clock. Concerns about whether local emergency services are equipped to handle incidents at facilities housing high-voltage equipment and significant fire suppression systems.

The communities that seem to navigate these tensions best are the ones where developers engage residents early, make specific commitments, and follow through — not the ones where a facility simply materializes behind a construction fence and residents learn what's happening from a zoning notice.

That finding, while intuitive, has real implications for how developers should approach site selection and community engagement.

Where Data Center Development Goes From Here

The CEDS survey lands at an inflection point for the industry. Demand for data center capacity is growing at rates that would have seemed implausible five years ago — driven by AI workloads that require orders of magnitude more compute than traditional cloud applications. Goldman Sachs projected in 2024 that data center power demand could grow 160% by 2030. That's not a projection that leaves much room for slow community engagement processes or prolonged zoning battles.

At the same time, community pushback is intensifying. Multiple jurisdictions — from Loudoun County, Virginia, to communities in Texas and the Pacific Northwest — have enacted or are considering moratoriums, stricter setback requirements, or outright zoning prohibitions on new data center construction. The era of frictionless greenfield development is ending.

The insider reality is this: the developers who are thinking carefully about community integration right now — the ones hiring local community liaisons before breaking ground, partnering with utilities on demand response programs, funding local workforce training, and engaging honestly about water and power tradeoffs — will have a meaningful competitive advantage as the regulatory environment tightens. Infrastructure that the community views as a shared asset, rather than an extraction from it, tends to get built faster and face fewer obstacles over its operational life.

For communities evaluating whether to welcome a data center, the CEDS findings suggest the right question isn't simply "do we want this?" It's "what do we want in exchange, and how do we make those expectations binding?" Tax abatements, community benefit agreements, local hiring commitments, and infrastructure co-investment provisions are all legitimate negotiating tools — and communities that go into those conversations prepared tend to come out better.

The data is moving somewhere. The question is whether the communities that host it will have shaped those terms or simply absorbed whatever arrived.

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