"AI Demand Surges but U.S. Data Center Construction Falls...Impact of Power Procurement and Permit Delays"

In the United States, construction of new data centers is lagging despite surging demand for artificial intelligence (AI). Delays in permits and power procurement have had an impact.

On February 25 (local time), Bloomberg News reported, citing data from real estate brokerage CBRE Group, that capacity under construction is projected to decrease from 6.35 gigawatts (GW) at the end of 2024 to 5.99 GW at the end of 2025. This is the first decline since 2020.

Gordon Dolven, director of data center research at CBRE, said in a report that, due to construction delays and improvements in long-haul network speeds, data center development is spreading from traditional core locations such as Northern Virginia to outlying areas.

He added, "This is being combined with increased interest in markets that can provide available land and power," explaining, "It is encouraging investment beyond traditional hubs and reshaping the North American data center market." In fact, while construction volume in Northern Virginia has plunged by 29%, it has surged by 169% in Chicago.

In recent months, local opposition to large-scale AI data center projects has intensified. The previous trend of welcoming the economic benefits of large construction projects is shifting toward scrutinizing the resource-intensive nature of these facilities.

Bloomberg News reported that such pushback is taking concrete shape across the United States. Recently, Illinois Governor JB Pritzker moved to temporarily suspend incentives for data centers in an effort to curb soaring electricity costs.

In addition, an Oracle site in New Mexico secured a support package consisting of tax breaks and government-backed bonds. However, concerns over potential environmental impacts have sparked protest demonstrations.

At the same time, tensions are rising in Northern Virginia, which has grown into one of the world’s most densely concentrated data center regions, and some residents are even considering leaving the area.

Meanwhile, Morgan Stanley and others project that more than 3 trillion dollars of investment in data centers, including power infrastructure, will be needed to meet future AI demand.