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The rapid expansion of data centers in the Atlanta metropolitan area is creating a significant conflict with the city's goals for urban development, including affordable housing and neighborhood retail. Fueled by cheap electricity and tax incentives, this growth is now facing pushback from lawmakers concerned about resource allocation and community impact. Based on our experience assessment, the tension between welcoming a booming tech industry and preserving community-centric development is becoming a central planning challenge for cities across the Southeast.
What is driving the data center boom in Atlanta?
Data centers are specialized facilities that house computer systems and associated components, such as telecommunications and storage systems. Atlanta has become a national hotspot for their construction due to a combination of attractive factors. These include relatively low-cost electricity from Georgia Power, state sales tax benefits on equipment purchases, and a pre-existing robust fiber-optic infrastructure. According to data from real estate firm CBRE, power capacity for data centers in the metro area surged by 76% in the first half of 2024 compared to the same period a year prior. Major tech companies like Microsoft, Google, and Meta are driving this demand, requiring ever-larger facilities to support artificial intelligence (AI) and cloud computing services.
Why are Atlanta lawmakers pushing back against new data centers?
The primary concern for city officials and residents is the competition for limited urban land and resources. Unchecked data facility construction would make it harder for the city to address its housing shortage, which was estimated at approximately 100,000 units in the greater metro area in 2022. In 2024, the Atlanta city council took decisive action by banning new data centers from opening in neighborhoods near public transit and the popular Beltline trail. As stated by Mayor Andre Dickens, this move reflects a policy that "Data Center development cannot be prioritized over people-centered urban development, including affordable housing, quality jobs, and neighborhood retail."
How does data center growth impact local infrastructure and other industries?
The impact extends beyond just land use. Data centers are immense consumers of electrical power. Georgia Power has reported that requests for power from potential economic development projects, predominantly data centers, could total 36,500 megawatts by the mid-2030s. This figure surpasses the utility's entire current generating and purchased capacity of 21,500 megawatts. This raises concerns that devoting too much of the state’s power capacity to data centers could mean fewer resources for other industries that may create more permanent jobs. Furthermore, while data centers generate significant property tax revenue, the long-term value they add to a city's "vibrancy" is debated, as they typically employ a small permanent staff compared to manufacturing or retail sectors.
What is the future of data center development in the region?
While Atlanta's new regulations may slow development within city limits, much of the future growth is expected to shift to suburbs outside of the city's jurisdiction. Real estate data firm Green Street projects that by 2028, the Atlanta metro’s data-center inventory will grow to a power load of more than 4,000 megawatts. Developers are likely to continue seeking locations with a "smooth path" for zoning, avoiding areas with potential community opposition. This trend is not unique to Atlanta; other jurisdictions, like Fairfax County, Virginia, have also begun implementing distance restrictions for new data centers.
Conclusion
The situation in Atlanta serves as a case study for other growing metropolitan areas. The key takeaways for communities and investors are:
Cities must carefully weigh the benefits of a booming property sector against the pressing need for people-centered urban development.
