AI Data Centers on Federal Land: A Gold Rush for Property Owners
- Craig Kaiser
- Oct 31
- 9 min read
A major federal initiative is unlocking a massive opportunity for property owners across the country. The Department of Energy has just announced that four federal sites will host new, cutting-edge data centers specifically designed for artificial intelligence. This move signals a significant acceleration in the nation's AI infrastructure and highlights the immense demand for suitable land- a demand that extends far beyond government property.
For private and public landowners, this development is more than just news; it's a call to action. The race for AI dominance is on, and the very foundation of this expansion is land. As data center developers search for the next ideal location, your property could be exactly what they need. This article explores the government's recent move, the explosive growth of the data center market, and how you can position your property to attract lucrative development deals.
The Government's Leap into AI Infrastructure: Data Centers on Federal Land
Data centers are the core infrastructure for digital services used by individuals, businesses, and governments daily. With growing demand for cloud computing and AI, this critical part of the digital economy is poised for rapid expansion. In July 2025, the U.S. Department of Energy (DOE) announced the next steps in the Trump administration’s plan to bolster U.S. leadership in AI Data center infrastructure by siting future projects on 4 DOE properties:
Idaho National Laboratory
Oak Ridge Reservation
Paducah Gaseous Diffusion Plant
Savannah River Site
As part of the Trump administration's priority to facilitate the rapid buildout of data centers, these sites were chosen for their existing infrastructure, which can support the immense energy and security needs of modern AI computing. Energy Secretary Chris Wright stated this initiative is a "bold step to accelerate the next Manhattan Project," emphasizing its importance for national security, grid reliability, and energy cost reduction. This public-private partnership model, where private sector partners develop the centers on federal land, establishes a clear blueprint. It demonstrates that the demand for AI infrastructure is a national priority, creating a ripple effect that will drive demand for similar sites in the private sector.
More recently, in October 2025, the U.S. Air Force has offered to lease federal land at the Edwards, Davis-Monthan, Arnold, Robins, and McGuire-Dix-Lakehurst bases to private companies seeking to build high-powered data centers. Proposals are due November 14. They must meet federal law by offering at least fair market value for the land and include an estimated $250,000 one-time payment for administrative expenses. Winning proposals are expected in January.
There are numerous benefits associated with data center development beyond national security, grid reliability, and energy cost reduction. These facilities are powerful engines for local economies, offering a significant boost by generating substantial tax revenue for municipalities and states, which can then be reinvested in public services. They create high-paying jobs, fostering a skilled workforce within the community. Beyond direct economic contributions, data centers also drive progress in key areas like renewable energy, due to their substantial power demands, and continuous technological development in fields such as advanced cooling systems, power management, and computing infrastructure.
Why Data Centers are the Public & Private Landowner's Golden Ticket
The federal government's investment into data centers is just the tip of the iceberg. The demand for data centers is growing at an unprecedented rate, driven by cloud computing and the computational power required for AI. A recent analysis by McKinsey shows that global demand for data center capacity could more than triple by 2030. In the United States alone, the market is projected to grow by 20-25% annually.
What does this mean for public and private property owners? It means that developers are actively and urgently seeking land that meets specific criteria, and they are ready to pay premium prices for properties that check their boxes.
What Data Centers Developers are Looking For
Data center developers are not just looking for any open field. Properties that qualify for data centers have specific attributes, like access to power, water, and fiber optics.
Access to Power: AI data centers are incredibly power-hungry. Properties near high-voltage transmission lines, substations, or areas with potential for new energy generation (like solar farms) are highly attractive.
Water Resources: Cooling is a major operational cost. Access to a reliable water source for cooling systems is a significant advantage, though developers are also exploring innovative, less water-intensive cooling technologies.
Fiber Optic Connectivity: High-speed data transfer is non-negotiable. Proximity to major fiber optic networks is essential for a data center to function.
Size and Scalability: Developers prefer large parcels of land, often at least 30 acres, that allow for the construction of large data center campuses with room for future expansion.
Favorable Zoning: Land that is already zoned for industrial or commercial use, or is in a jurisdiction that is open to rezoning for this purpose, faces fewer hurdles and is more valuable.
If your property has one or more of these characteristics, it could be a prime candidate for a multi-million dollar data center project. Data center developers typically purchase land as opposed to leasing it (which is common for renewable energy projects, like solar and wind farms), but they are often willing to pay premium prices for these properties.
One way that property owners can connect with data center developers regarding land opportunities is through LandApp's marketplace. Top tech companies use LandApp to evaluate sites and contact interested landowners directly with offers. Real estate professionals, government agencies, and private landowners can list their land for sale or lease on LandApp for free, with no obligation to accept offers.
How U.S. State Governments Can Benefit From Data Centers
U.S. states are attracting significant interest and investment from hyperscalers and colocation providers eager to develop new data centers. States that effectively plan, manage, and mitigate the risks associated with this growth can unlock millions, potentially billions, of dollars in economic benefit. Simultaneously, they can create high-paying jobs and establish themselves as leading digital infrastructure hubs.
While AI's growth and economic impact remain somewhat uncertain, significant investment in AI could boost GDP, create high-paying jobs, and drive innovation across industries. However, challenges like infrastructure demands and consumer resistance need addressing. State governments should carefully weigh costs and benefits as they develop their strategies.
Case Study: Benefits of Data Centers in Northern Virginia
Northern Virginia demonstrates how strategic planning can leverage data center growth and benefit local governments. By investing in robust infrastructure, maintaining a reliable energy grid, and offering targeted tax incentives, the region now hosts 13 percent of the world’s data center capacity, according to a recent analysis from McKinsey & Company. It has also mitigated risks through local zoning controls and energy efficiency measures, becoming a global digital infrastructure hub that generates billions in economic output.
The Commonwealth of Virginia has already experienced various benefits from data center development, like economic growth, job creation, and increased tax revenue.
Economic Growth: Investment in data centers can drive GDP growth, create thousands of high-paying jobs, and spur innovation across various sectors. Based on a study by the Northern Virginia Technology Council, the state of Virginia generated about $31.4 billion in supported economic output from data center construction and operations in 2023.
Tax Revenue: In Loudoun County, Virginia, data center development has led to a substantial increase in tax revenue, estimated at $890 million. The impact on the county’s projected $940 million operating budget is clear. Data centers cost Loudoun County just $0.04 for every $1 of tax revenue, significantly less than the $0.25 per $1 from traditional businesses. This revenue surge helps the county maintain the lowest real property tax rate in Northern Virginia (25% lower than neighboring counties). It has also funded $1 billion in road projects and 36 new schools over 15 years, reducing pressure on residential taxpayers.
Job Creation: A large data center can create up to 1,500 on-site construction jobs for site developers, equipment operators, construction workers, electricians, and technicians. Many of these roles offer wages over $100,000 per year, not including overtime. In 2023, Virginia's data centers supported approximately 12,140 operational jobs and 14,240 construction jobs. Furthermore, each operational job within a Virginia data center supports an additional 3.5 jobs in other sectors of the state's economy, excluding construction.
Multi-Industry Growth: Data centers boost related industries like energy, telecom, cloud services, software, and manufacturing. This drives further development within the data center value chain. For example, Northern Virginia's data center growth increased power demand, prompting Dominion Energy to build new substations and transmission lines, such as in the Haymarket area.
Increased Property Values: Data center growth in Prince William and Loudoun Counties in particular, often called 'Data Center Alley,' has led to a boom in real estate and an increase in property values in the surrounding regions. The value of industrial land in these counties has also increased significantly, with data center operators oftentimes paying up to 2 to 4 times the market value for suitable land, if not more.
Technological Innovation: The high-tech needs of data centers drive research and innovation. For instance, their significant power requirements are accelerating the development of green-energy solutions like fuel cells, solar power, and small modular reactors. Additionally, the trend toward modular data centers allows for faster and more sustainable construction compared to traditional methods.
Renewable Energy Development: Technology companies operating data centers prioritize sourcing renewable energy locally. This drives significant investment in Virginia's renewable energy sector. As of Q2 2025, the Solar Energy Industries Association (SEIA) reports Virginia has installed 7,133 megawatts of solar generation capacity. Amazon alone owns 19 solar farms in Virginia which, when fully operational, will power 276,000 U.S. homes.
Considerations & Challenges of Data Center Development for State Governments
Although the rapid growth of data centers presents numerous benefits, it also poses major challenges for local governments and public infrastructure. States must address issues such as power supply strain, water scarcity, resource limitations, project delays, and potential community backlash when planning data center developments.
Power Grid Strains: Data center power needs in the U.S. are projected to add 460 terawatt-hours of demand from 2023 to 2030, tripling current consumption. This significant load on regional grids, especially in constrained areas, will require new supply and transmission expansion. Meeting these infrastructure timelines is challenging given the rapid growth in data center demand, but co-locating data centers with solar farms and battery storage systems stands as a potential solution.
Water Scarcity: Data centers' heavy water consumption strains local supplies. While less water-intensive cooling exists, it often requires more power and uses less proven technology. New power sources, especially thermal plants built to support data centers, also demand significant water for cooling.
Resource Bottlenecks: Building a data center requires a significant amount of land, labor, and equipment, all of which can be difficult to acquire in resource-limited states. A major hurdle is sourcing skilled labor for both the data center and its power infrastructure, as these professionals are often tied up with other electrical and mechanical projects. These bottlenecks can cause considerable delays and reduce the efficiency of new data center construction.
Risk of Suspended Projects: Despite significant investment, some hyperscalers have pulled back or paused large-scale data center projects. This can stem from economic uncertainty, power constraints, construction delays, or potential oversupply. Additionally, AI and machine learning workloads demand specialized designs, often requiring hyperscalers to re-evaluate existing plans. These factors underscore the challenge of accurate long-term demand forecasting.
Community Backlash: The previously mentioned challenges above can lead to public objections to data center development. Governments must weigh the costs and benefits, and if they proceed, proactively communicate the community benefits, such as job creation beyond the data centers themselves.
Each state must balance economic benefits with specific costs. Identifying the point at which these benefits begin to diminish requires analytical and strategic insight. Thoughtful public-private partnerships can help manage these trade-offs. Strong incentive programs, infrastructure investments, workforce training, and renewable-energy programs are some examples of these trade-offs. Ohio, for example, has offered full or partial sales tax exemptions for organizations making significant investments in data centers.
American Electric Power (AEP), which serves central Ohio, is expanding infrastructure with a major transmission build-out and special-rate structures for data centers. Through a $2.82 billion strategic partnership, AEP plans to fund thousands of miles of new transmission lines across Ohio and nearby states. To further support the local workforce, Ohio has collaborated with private organizations to introduce training programs like the STAR (Skilled Trades and Readiness) Program and data center technician certifications offered by hyperscalers.
How to Connect with Data Center Developers
The primary markets for data centers, like Northern Virginia, are becoming saturated. As a result, developers are aggressively expanding their search into new, high-potential regions across the country. For example, data center developers have typically prioritized sites near urban communities, but now they are increasingly looking for rural land due to its lower costs, lower climate risks, and potential to be sited near solar and wind farms.
The biggest challenge for these developers is finding the right properties efficiently. This is where you, the property owner, have a distinct advantage- and where LandApp provides the connection. Don't let your property's potential go unnoticed. By listing for lease or for sale on LandApp's marketplace, you place your land directly in front of the nation's leading data center developers who are searching for their next site. The market is hot, and the time to act is now. List your property for free on LandApp today and connect with developers ready to pay top dollar for the right location- all with no obligations to accept any offers.
For local U.S. governments looking to capitalize on the data center boom and bring these facilities to their communities, LandApp can help. Book a call with our government team to discuss how we can help you determine which sites within your real estate portfolio are best-suited for data centers and connect directly with developers, all at no cost:
