SoCal Set for Data Center Infrastructure Surge - But Regulatory Challenges Persist
The data center industry is experiencing an unprecedented surge in infrastructure, with nearly 100 gigawatts of new capacity coming online between 2026 and 2030. This effectively doubles the global total and creates over $1.2 trillion in real estate value.
Importantly, Southern California is positioned to capture a significant share of this growth as major end users seek proximity to major tech hubs, content providers, connectivity ecosystems and the region's massive population base.
However, the area's power grid constraints and regulatory environment will require innovative energy solutions and strategic site selection to fully capitalize on this opportunity.
?The AI inference evolution phase is creating demand from new users that typically wouldn't enter the SoCal market at scale due to cost and political barriers,? according to Darren Eades, managing director of brokerage at JLL, who is a member of its data center solutions team.
?However, we see a new wave of demand building and hitting the coast in a big way.?
He said that the recent data center developments in areas like Vernon, Downtown Los Angeles, Monterey Park and Long Beach represent ?only the tip of the iceberg,? as they will sustain just a small portion of the initial demand.
?The AI revolution is driving this explosive growth,? Eades added. ?While AI represented just 25% of data center workloads in 2025, we expect it to account for half by 2030, with a critical shift to inference-driven demand occurring around 2027.?
He said the scale of required investment is staggering ? which amounts to up to $3 trillion by 2030.
?California's success in this unprecedented opportunity will depend on our industry's ability to encourage change within regulatory constraints, utilities ability to be price competitive, incentives, and the creativity of industry leaders to enable a welcoming environment for these massive opportunities in our region,? Eades explained.
JLL?s new 2026 Global Data Center Outlook report said AI is at an inflection point, as 2027 marks a critical shift when AI inference overtakes training as the dominant workload, redistributing demand from centralized clusters to distributed regional hubs.
Four-year grid connection delays are forcing operators toward everything from ?bring your own power? mandates to behind-the-meter generation, according to the report.
A key wrinkle is that despite 93% national support for data centers, only 35% want them locally ? creating a 58-point gap, according to JLL. That?s challenging projects worldwide and forcing industry transformation.
Source: GlobeSt/ALM