Prologis Tries to Get Ahead of Data Center Backlash
Prologis has introduced a set of responsible data center development commitments as community resistance creates another obstacle for a sector already constrained by access to land and power.
The company's eight commitments address many of the concerns driving opposition to data centers, including pressure on electric grids and water supplies, higher costs for utility customers, backup-power emissions, noise, traffic and a perceived lack of transparency.
Prologis said it will plan for infrastructure needs early and pay its fair share of project-related costs to avoid shifting them to existing utility customers. The company also pledged to use water responsibly, clearly disclose backup-power plans, reduce environmental effects and design facilities with nearby residents in mind.
Other commitments include engaging communities throughout the development process, explaining projects' economic benefits and tracking whether the company fulfills promises made during approvals.
Expanding Digital Infrastructure Pipeline
The initiative comes as Prologis substantially expands its exposure to digital infrastructure. The company increased its data center power pipeline to 5.8 gigawatts during the second quarter and started $1.6 billion of logistics and data center development, according to itsquarterly results.
Prologis has previously estimated that data center development costs roughly $3 million per megawatt, implying that a pipeline of its current size could support more than $15 billion of investment.
The larger market opportunity is also expanding rapidly. JLL expects nearly 100 gigawatts of new data center capacity to be added worldwide between 2026 and 2030, roughly doubling global capacity as the sector grows at a 14% compound annual rate.
Demand continues to outpace additions in major markets. North American inventory across Northern Virginia, Atlanta, Dallas-Fort Worth and Chicago increased 33% year over year during the first quarter, but vacancy still fell to record lows, according toCBRE. Vacancy reached 0.3% in Northern Virginia, 1% in Atlanta, 1.8% in Dallas-Fort Worth and 2.2% in Chicago.
Stricter Standards Take Hold
The rapid expansion is prompting residents and public officials to question whether data centers consume disproportionate amounts of electricity and water while leaving communities to finance infrastructure upgrades. Concerns about noise, emissions and the relatively small number of permanent jobs created by some facilities have also complicated project approvals.
Some jurisdictions are responding with stricter development standards. Colorado Springs recently announced that proposed data centers must pay for their required infrastructure, conserve water and limit noise rather than receiving automatic approval.
Source: GlobeSt/ALM