The real estate market in Atlanta is heating up — but not for the reasons you might expect. While many construction ventures fail to secure funding, investors are flocking to one type of project: hyper-scale data centers.

Data center construction in the area has increased by more than 75% in just one year. Of course, developers and their investors see this as a good thing, as it creates jobs and generates property tax dollars.

Those perks have caught the attention of local government leaders, who often incentivize companies to build in the area. Though not everyone is on board, it seems to be the future focus for the city of Atlanta and beyond.

Demand Is up While Capacity Is Down

Record-high demand drives this race to secure real estate for data center projects. While Atlanta office space currently has high vacancy rates, those for data centers plummeted from 9% to just 1% between 2020 and 2024. Many believe the increased power demands of artificial intelligence are to blame.

Whatever the reason, investors are putting up billions to have a piece of the pie. Atlanta stands ready to welcome many big data center projects with open arms, including:

• Texas-based DataBank’s expansion of its AT5 campus in Lithia Springs
• An unnamed company looking to take over 2.1 million square feet of land in Coweta County
• EdgeConneX’s $318 million purchase of 63 acres in Union City for Microsoft’s new billion-dollar data center
• T5’s 300-megawatt data center currently under construction in Palmetto

Many of these areas are south of the city, where cheaper land and power abound.

The Problem With “Big Data”

As more organizations work toward a digital transformation, the business of data centers will only continue to grow. For example, Allan Schurr (chief commercial officer of Texas microgrid company Enchanted Rock) notes in an article published by The Atlantic Journal-Constitution that “Just a couple of years ago, a big datacenter might have been a 50- or 60-megawatt data center. Now, they’re 10 times that.”

However, not everyone is happy about the recent developments.

For one, data centers can drive up utility costs and strain the grid, which may frustrate customers in surrounding communities. Georgia Power customers have already experienced several rate hikes over the last few years, mostly to absorb costs generated by the construction of the Alvin W. Vogtle clean energy plant in Waynesboro. Consumers are worried that this scenario could play out repeatedly as more data centers go up.

The situation is especially concerning because Georgia Power may have already factored these projects into their projections and are relying on their completion to hit growth targets. Though GP says data centers will drive rates down, other estimates suggest customers could see more increases.

Even more worrying is that providing the power for these data centers may result in the use of more fossil fuels, which would negatively impact climate change. This has prompted some to decry Georgia’s willingness to put money and business growth above the needs of the people.

Finding a Solution to Georgia’s Power Problem Won’t Be Easy

The Georgia legislature was able to pass measures to eliminate incentives for data center companies by suspending an equipment sales tax break. However, Governor Brian Kemp ultimately shot it down because of the negative impact it might have on future economic growth.

Though some believe the state needs more time to evaluate the potential impact of Atlanta’s new booming data center economy, these projects are moving forward quickly. Atlanta has now become the latest data center hub and will likely remain that way for a long time to come.

Learn more by checking out The Atlanta Journal-Constitution’s original article by Zachary Hansen and Drew Kann.