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For months, data centers have been the only bright spot in a weak construction market. Now, developers chasing gigawatt data centers have found that many projects are stalling before construction crews even get started.
The reasons range from a lack of enough power for the electricity-hungry behemoths to public opposition and, in a growing number of regions, legislation aimed at curbing the data center boom.
Access to power is a key obstacle. The size and scale of these facilities has grown rapidly. A few years ago, a 100 megawatt lease would have been considered a massive build. Today, 1,000-megawatt-plus projects are setting the benchmark, said David Guarino, head of global tower and data center research at Green Street, a commercial real estate data provider based in Newport, Calif.
The projects’ need for large amounts of energy has created obstacles for construction and driven up prices. Meanwhile, communities and political groups have opposed the projects, causing delays or abandonment.
Political resistance to construction
In fact, data center project cancellations more than quadrupled to 25 in 2025, from six in 2024. In 2023, there were two such cancellations. That’s according to a recent research note from Justin Hauke, senior research analyst at financial services firm Baird.
For these reasons, said panelists at this year’s New York Build conference a community benefits plan it is quickly becoming a must-have for data center builds proposed to survive scrutiny. “The number one concern we have in the market right now is public sentiment,” said Rob LoBuono, principal at San Francisco-based design firm Gensler, during a panel discussion on the topic.
“What looks workable on paper usually breaks down with power, permissions or manpower, and sometimes all three.”
Brennan’s Church
Director of Engineering, Procurement and Construction at data center developer Hut 8
At least 188 local opposition groups now operate in 40 states, according to Baird. And some states have already proposed construction moratorium laws on the facilities.
In Maine, a bill that would block the constructions more than 20 megawatts through the end of 2027 has landed on Gov. Janet Mills’ desk, though she has yet to sign it into law. In Virginia, developers left a data center campus planned project near Manassas National Battlefield. According to Baird, similar data center construction ban proposals are being considered in more than a dozen states.
With critics increasingly voicing concerns that the constructions are causing spikes in consumers’ electricity bills, developers have taken steps to respond. For example, hyperscalers recently committed to “build, carry or buy all the power” needed for data centers, although many experts are skeptical the lien will give taxpayer relief.
on the ground
If and when a data center project makes its way through the legal front, the job won’t get any easier on the ground.
“The biggest bottleneck we’re seeing is in long-life electrical equipment. Switchgear, transformers and generators operate on extended lead times, with medium-voltage switchgear often 40 to 60 weeks longer,” said Brennan Church, director of engineering, procurement and construction at Hut 8, a Miami-based data center developer. “A shell can be mechanically completed and roughened, but if the gear is not in place, you’re not energizing.”
Demand equipment such as switchgear and transformers continue to face delays that extend project completion timelines. The same problem was affecting rise of advanced manufacturing in 2023, straining steel and switchgear supply chains.
Unlike the advanced manufacturing versions, however, data centers require an additional round coordination on access to energy. This has become as important to project deadlines as execution in the workplace.
“This is a common challenge across the industry at the moment. A site may look perfect on paper, with strong land and fiber access, but if the company can’t commit to a firm delivery time, the project stalls,” said Church. “What looks workable on paper usually breaks down with power, permissions or manpower, and sometimes all three.”
For this reason, contractors prioritize projects where power is already secured. Fewer companies are willing to mobilize a large crew only to sit idle waiting for power, Church said. He added that projects that cannot demonstrate this level of readiness have a harder time attracting top partners.
But even if it takes one a lot of time for the team to get into the hands of contractors, orders are still coming in.
“Lease sizes are getting much larger, driven by both neocloud and hyperscalers,” said Guarino. “I wouldn’t say either one is leading the charge, but both groups are collectively moving forward.”
