Data centers present a local economic opportunity, as developers seek future sites to meet the growing demands of AI models that process, store and deliver digital information. But commercial real estate practitioners also face challenges getting projects off the ground—data centers have become a “hot potato” due to community opposition, perceptions about electricity and water use, and concerns about the impact on the local real estate market.
Municipalities struggle to balance the economic merits that typically accompany data center development against opposition from residents who may lack accurate information.
Electricity is one of the biggest concerns surrounding data centers. They can use large amounts of power, and for local homeowners, the question is understandable. National Association of REALTORS’s 2026 Data Center Impact Report compares residential and industrial electricity rates, as well as maps the demographics of areas where data centers are expanding most. The NAR study concludes that there is no single “data center effect” on housing markets; instead, local impacts vary widely depending on pre-existing regional conditions.
A project’s success often hinges on information, resources and relationships that only a local broker can provide. Consider these insights and tips from real estate pros involved in data center developments.
Focus on Power
While the fundamentals of land sales (e.g., zoning, permits and easements) apply to any industrial development, data centers have unique needs. “Powered land adds an additional layer of complexity, as well as benefits that may convey with the land or be brought to it,” says CEO Simon Enwia, CCIM, CIPS, designated managing broker of SENW in the Chicago area. Enwia represents owners, developers and hyperscalers in the disposition of data center development sites and powered land.
“Power is the number one need,” Enwia continues. “Some municipalities codify heavy industrial and data centers the same; some don’t,” he adds. “Many prospective hyperscalers want sites that can ultimately scale to at least one gigawatt of power. Edge sites, enterprise sites and colocation operators typically want at least 50 megawatts of power, although the actual requirement depends on the use. At those levels, power availability, utility study requirements and delivery timelines become a major part of the real estate decision.”
“Adaptive reuse opportunities for data centers are often power-related,” says Enwia. “Former heavy manufacturing facilities or brownfield sites can be especially attractive because significant electrical infrastructure may already exist. Whether the building itself can be reused depends on structural floor loading, floor plate and column configuration, equipment access, available exterior space for generators and cooling equipment, fire and life-safety requirements and the ability to route electrical and fiber infrastructure,” he adds.
Even when it’s not economical to convert an available building, Enwia notes that the existing power infrastructure may still be adapted for data center redevelopment. “You’re reusing a site that may be vacant or a blight on the community, or may have environmental issues that can be mitigated and is likely to be located away from homes,” he says.
Match the Data Center to the Site
Inference centers are a distinction within the data center sector that primarily run AI models and serve results to users (think ChatGPT). Inference centers favor urban and near-urban locations with strong network connectivity and low latency, compared with the larger, high-density campuses used to train AI models, which are typically in less populated areas. Because of their urban location, inference centers may face less municipal opposition. They can also be a good option for existing properties with asbestos or brownfield sites that are difficult to lease or sell.
Jim Kerrigan, SIOR, founder of North American Data Centers, has worked on numerous urban inference data centers. “These require significantly less power,” says Kerrigan, citing the example of a former manufacturing facility.
“As little as five to 10 megawatts of power or as much as 30 megawatts could make it ideal for an urban data center, although insufficient for an AI training center,” he says.
Global management firm McKinsey & Company projects that by 2030, inference could represent more than half of AI computing and roughly 30 to 40% of total data-center demand.
Have All the Facts
“Whether to identify a viable data center site or to counter local opposition, you must do the research and have all the facts,” says Greg Hrabcak, CCIM, associate broker with Hanna Commercial Real Estate in Columbus, Ohio. “When a data center developer comes into a market, it’s not their first rodeo,” he says. “There’s no objection they haven’t heard or new problem to overcome, so it’s our job to fully understand the scope of what they’re trying to do and be able to convey at the local level.”
To stay on top of opportunities and objections, Doug Tenenbaum, senior vice president with Hanna Commercial, serving central and southwest Ohio, says he starts each morning reading regional business journals and PDFs data center-related articles to a database. “More communities are putting moratoriums on data center developments,” he says. “So, when I first talk to a developer looking at possible sites in the region, I can punch in the word ‘moratorium’ and identify every township that instituted a restriction.”
In 2025, at least 25 U.S. projects were canceled due to local opposition, up from six in 2024, and an estimated $98 billion in projects were blocked or delayed, EPRI reports.
Manage Seller Expectations
Like data center developments, sellers differ. Some refuse to sell for data center development. “Money doesn’t motivate everyone,” says Tenenbaum, referring to letters sent describing a near $1 billion industrial development. “That is life-changing money, but many don’t respond,” he adds.
Alternatively, Hrabcak tells of sellers who learn of the planned land use and think they’ve hit the lottery, failing to understand how the market works. “Managing sellers’ expectations is a critical part of the broker’s role,” he says. “Beyond market value, timing is a big factor,” noting that a data center going into raw ground can be a four-year deal. “There’s a lot to work through, so with any given seller you have to share expectations and hope that their expectations are somewhat aligned.”
Landowners with high-voltage lines running across the property often mistakenly assume the land is data center-ready. Kerrigan equates power lines to a train line. “Just because the tracks are there doesn’t mean you can catch the train from that location; you have to go to the train station,” says Kerrigan. “With power, you need a nearby substation and local utility buy-in that they have the capacity,” he adds.
“In these situations, the developer or the hyperscale company sells some of the site development land to the utility for a substation or switchyard,” says Kerrigan. The utility may therefore become a third party in what was initially a two-party land transaction, removing 30 acres or more of income-generating land.
Become the Local Expert
Beyond identifying, assembling and negotiating land parcels, a local broker’s value comes from insight and knowledge gained through hyper-local market experience, understanding the land’s history and local opposition and established relationships with municipal and utility authorities.
“The first thing a developer looks for in a local broker is expertise,” Enwia says. “Then they look for relationships with municipal or regional authorities, including utility companies,” he adds. When brokers have relationships with local utility companies, they can signal to the utility that they are working with a qualified developer who will be responsible and work together to get the project done.
“Local expertise involves knowing where the utilities are, zoning, prospects for getting land rezoned, and so on,” says Hrabcak, stressing the need to maintain client confidentiality throughout the process. “Expect that everyone involved will need to sign an NDA, including municipal leaders.”
“People think that something nefarious is going on because the city council signed an NDA,” Tenenbaum says. “But it’s often a publicly traded company that doesn’t want anyone to know who they are until they determine a site’s viability.”
Kerrigan uses software to track wetlands, floodplains and other factors that restrict development, including protected animal habitats, citing an Indiana regulation that allows development only during certain months because of a critical bat habitat.
Be a Problem Solver
Faced with a potential barrier to an Iowa data center development, Kerrigan identified a solution and saved his client millions by drawing on an operating data center in Indiana. Concerned about water usage, the municipality suggested building a $70 million water filtration plant. Kerrigan contacted an Indiana center in a similar climate and learned they used an air-based cooling system, eliminating the need for a new water plant.
Local expertise involves knowing where the utilities are, zoning, prospects for getting land rezoned, and so on.” -Greg Hrabcak
Given the proximity to farmland, concerns then arose about dust and debris clogging the filters during harvest. Reaching out to one of the cooling system manufacturers, Kerrigan learned they address the issue by cleaning the filters frequently during harvest time. He expects to see an increase in rural-based centers in 2027.
“After 28 years of attending data center conferences, I was fortunate to have resources that helped me get that transaction done,” he says.
Build a Team of Experts
“Most brokers are not power experts or engineers and rely on experts to understand if the site is data-center friendly,” Enwia says. “Some sellers have more funding and expertise, and want to sell a data center-ready site. Others don’t want to deal with the entitlement process, so I tap a pool of experts I call my SWAT team,” he says.
Enwia’s team includes an architectural firm that reviews site plans, energy consultants and engineers who assess site power availability and technology consultants for fiber optics. He also uses tax specialists, incentive consultants and attorneys who work with that municipality, county or state and even at the federal level. To work through the process, Enwia devised a 10-factor checklist organized by importance.
Navigating Municipality Concerns
Power availability ranks high among the reasons for community opposition. “There are solutions,” says Tenenbaum. “We’re starting to see more gas-fired generation developed behind the meter. But even when a client is considering behind-the-meter generation, the site still needs to be adjacent to or in close proximity to high-voltage transmission infrastructure with available capacity.”
Water usage is another often-voiced concern. Enwia’s experience is that, with a closed-loop system, a data center uses far less water than most manufacturing facilities. Power or water, Hrabcak stresses that misinformation is widespread. “A broker adds value by identifying location-specific strategies to counter concerns and helping communicate factual information to the community,” he adds.
Pursue a Collaborative Strategy
“Elected officials representing municipalities should identify appropriate sites early with the help of experts and take what I call a ‘Yes, but’ approach,” Enwia says. “‘Yes, but you need to improve this infrastructure, build something the community needs, mitigate a specific impact or better integrate the data center into the community.’” He continues, “A NIMBY approach may produce short-term votes, but it can also cause a municipality to lose long-term investment and infrastructure opportunities.”
Enwia advocates for municipalities and developers working together to create responsible data centers that do not adversely affect the community. “Water use, noise, traffic, infrastructure demands and other site-specific concerns should be identified early and addressed through design, the entitlement process and development agreements,” he says.
For these projects to succeed, you need to know what the community needs.” –Simon Enwia
Increasingly, communities negotiate local investments. Enwia cites Compass Datacenters’ partnership with Meridian Community College in Mississippi to provide hands-on data center workforce training, with Compass funding full-tuition scholarships for the inaugural cohort. Tenenbaum recalls examples of developers paying millions of dollars to support the school district or fire department and expects to see more of that in the future.
“Every local area is going to work differently,” Enwia advises. “For these projects to succeed, you need to know what the community needs,” adding, “Don’t tell them what they need; ask them and involve them in the development process.”
Some municipalities are proactive. Tenenbaum recently reached out to a local official to ask about a particular site. “I didn’t say that it was for a data center, but based on the acreage, it would be a fair assumption,” he says. “The official said, ‘If your client is looking for a data center, know that we have plenty of sufficient power and water capacity, and we deem the site suitable for industrial growth.’ It was refreshing to hear that, but that is not the norm.”
The Changing Narrative
In January 2026, Microsoft announced its Community-First AI Infrastructure Initiative, outlining five commitments to communities hosting its data centers, from electricity prices to local jobs. Lobbying efforts have also increased. Between April and June 2026, more than 200 companies, associations and advocacy groups lobbied on data-center issues—more than twice the number from the comparable period in 2025, Politico reports.
“Unless the data center developers and the tech companies bring the communities in to work on these things together, then community acceptance is going to get worse,” Enwia says. In the meantime, brokers can play a valuable role in educating all of the players and helping ensure responsible developments that benefit the community.
