Why Data Centers Are the Future of Infrastructure
Data centers are reshaping infrastructure and land development. Discover the critical factors for successful data center development!
The letter arrived at a Washington Township planning meeting on February 4th, carrying significant weight. Prologis — one of the largest real estate developers on the planet — was signaling its intention to develop a data center site in the township. For local officials, this wasn't just a zoning question; it was a preview of what's coming for communities across the country.
Data centers are no longer the quiet, anonymous buildings that only network engineers thought about. They are the physical backbone of everything digital — AI inference, cloud storage, streaming, financial transactions, healthcare records. The infrastructure investment required to build, power, and connect them is reshaping land development in ways that rival the industrial booms of the 20th century.
The question isn't whether data center development will come to a community near you; it's whether that community is ready.
What a Data Center Actually Is — and Why It Matters Now
Strip away the jargon, and a data center is a building full of servers, cooling systems, and power infrastructure, connected to the internet at high speed. But that description undersells what's happening at scale.
Hyperscale data centers — the kind companies like Amazon Web Services, Microsoft Azure, and Google Cloud operate — can consume 100 to 500 megawatts of power each. A single large facility draws as much electricity as a small city. The cooling systems alone require engineering feats: some facilities circulate millions of gallons of water daily to keep hardware from overheating.
The market numbers reflect the urgency. Global data center capacity is projected to grow at a compound annual rate exceeding 10% through the end of the decade, driven by the explosion in AI workloads. Training a single large language model can consume as much electricity as hundreds of homes use in a year. Inference — running that model millions of times per day — requires sustained, permanent power draws that make data centers among the most energy-intensive buildings humans have ever constructed.
That's what makes Prologis's move into data center development significant. Prologis built its empire on logistics warehouses — the fulfillment centers behind e-commerce. Now it's pivoting toward digital infrastructure. When a company with a $100+ billion market cap repositions its development strategy, it's worth paying attention.
Site Selection: Why Location Is Everything
Data center developers don't pick sites the way a retail chain picks a storefront. The criteria are technical, political, and economic — and all three have to align.
Power availability is the single most critical factor, and it's increasingly the one that kills deals.
Utilities in Northern Virginia — the largest data center market in the world, home to roughly 70% of global internet traffic — are now quoting multi-year wait times for new large-load interconnections. Dominion Energy has publicly acknowledged that the pace of data center applications is straining its planning capacity. That bottleneck is exactly why developers like Prologis are looking at secondary and tertiary markets: places with available grid capacity, land, and a regulatory environment that won't slow construction to a crawl.
Beyond power, fiber connectivity matters enormously. A data center without low-latency fiber access to major internet exchange points is a warehouse, not a data center. Water access is increasingly scrutinized too — both for cooling and because communities are pushing back on facilities that strain local water supplies.
Zoning and local government relationships are underrated in site selection conversations. A community that understands what a data center brings — significant tax revenue, construction jobs, and a relatively light ongoing employment footprint — and has the regulatory framework to process permits efficiently becomes a magnet for development. Communities that don't are passed over quietly, without explanation.
What Data Centers Do to Land and Local Economies
A large data center campus can transform a parcel of agricultural or industrial land into one of the most valuable pieces of real estate in a county. The economic mechanics are unusual compared to traditional industrial development.
Construction phases generate substantial employment — electricians, ironworkers, HVAC specialists, concrete contractors. A major campus build-out can represent $500 million to $2 billion in capital expenditure, most of which flows into the local construction economy. But once operational, staffing levels are lean. A 100-megawatt facility might employ 30 to 50 people full-time. This is a feature for tax assessors and a frustration for workforce development offices.
The real prize for municipalities is the property tax base — and the utility tax revenue that flows from facilities consuming tens of millions of dollars of electricity annually.
Some jurisdictions have learned this lesson better than others. Prince William County in Virginia structured its data center zoning with clear performance standards, and it has since become one of the most active data center development markets in the country. Other communities have granted tax abatements too aggressively, giving away the revenue stream that makes data centers attractive as neighbors in the first place.
The land-use conversation is evolving, too. Large campuses require buffers, substations, generator farms, and access roads. They change the character of the land around them. Communities doing data center development right are thinking about campus design standards, visual screening requirements, and how a 400,000-square-foot concrete building integrates — or doesn't — with surrounding residential or agricultural uses.
The Clean Energy Equation
Data centers have a serious power problem, and the industry knows it. Facilities that run 24 hours a day, 365 days a year, consuming hundreds of megawatts, are incompatible with corporate net-zero commitments unless the energy source changes.
The major hyperscalers have responded with aggressive clean energy procurement. Microsoft, Google, and Amazon have each made headline commitments to run on 100% renewable energy — though the accounting behind those claims involves power purchase agreements and renewable energy certificates that don't always mean the facility is directly powered by solar or wind at any given hour.
The more interesting development is what's happening at the infrastructure level. Data center developers are increasingly co-locating with renewable energy generation — building solar farms or battery storage assets adjacent to or integrated with their campuses. Some are pursuing direct interconnection to avoid grid congestion entirely. The data center that can source its power directly from a co-located solar-plus-storage system becomes dramatically less dependent on utility timelines — which, given current interconnection queues, is a competitive advantage.
Nuclear is re-entering the conversation, too. Microsoft's deal to restart a unit at Three Mile Island specifically to power its data centers is a signal that the industry is willing to make unconventional moves to secure clean, firm power. Small modular reactors remain years away from commercial deployment, but data center load profiles — large, stable, and predictable — are exactly what nuclear economics require.
On the efficiency side, liquid cooling is rapidly replacing traditional air cooling for the densest AI compute workloads. NVIDIA's latest GPU generations produce heat densities that air cooling simply can't manage at scale. Immersion cooling and direct-to-chip liquid cooling are moving from experimental to standard practice, and they change the energy and water calculus for new builds significantly.
Where This Goes Next
The next decade of data center development will be defined by three pressures: power scarcity, AI demand, and community relations.
Power scarcity is already forcing geographic redistribution. Markets with available capacity — parts of the Midwest, Southeast, and Mountain West — are seeing developer interest that would have been unthinkable five years ago. States that have invested in grid modernization and have forward-thinking utility commissions are going to capture an outsized share of this capital.
AI demand is not a blip. The compute requirements for training and running large AI models are growing faster than Moore's Law — and unlike previous waves of internet growth, AI workloads don't compress efficiently. You can't optimize your way out of the hardware. This means the demand signal driving data center investment is durable, not cyclical.
Community relations — the unglamorous part — may be the most decisive factor in which communities win. Prologis showing up at a Washington Township meeting is a microcosm of what's playing out in hundreds of local government chambers. The developers who engage early, structure agreements transparently, and commit to community standards will find smoother paths. The ones who treat local governments as obstacles will find themselves in long, expensive battles that make Northern Virginia's wait times look manageable.
Infrastructure development has always followed power, water, and political will. Data centers are just the latest — and most capital-intensive — proof of that pattern.
The communities and developers who understand that aren't waiting for the opportunity to come to them. They're already at the table.