Do Data Centers Increase Property Values?
- Craig Kaiser
- Aug 8
- 6 min read
The debate around data centers and their impact on property values continues to grow as these facilities become more critical to supporting our digital lives. Data centers, with their high-tech infrastructure and operational scale, can shape local economies and influence surrounding communities in various ways. But do they truly drive up property values, or do they create challenges that offset potential gains? This resource explores the economic benefits and potential drawbacks of data centers, including real-world examples of their impact on property values. By examining these factors, we aim to present a balanced picture of how data centers affect the areas around them.
Do Data Centers Increase Property Values?
Data centers can have a varied and complex influence on property values, bringing both advantages and challenges depending on the circumstances. On one hand, data centers can boost housing demand and raise property values in nearby areas by driving employment and stimulating economic growth. On the other hand, they may be perceived as less desirable neighbors due to concerns about noise, environmental impact, and their visual footprint.
Potential Positive Impacts of Data Centers
Data centers play a critical role in supporting the digital infrastructure that powers businesses, services, and daily living. Data centers can bring tangible benefits to local communities by creating jobs, driving technological advancement, and fostering economic development.
1) Economic Benefits of Data Centers
One of the most immediate positive outcomes of a data center is the jobs it creates. While direct employment opportunities within the facility are often limited to IT professionals, engineers, and maintenance staff, the ripple effect can be substantial. Construction projects, during the facility's development phase, generate additional jobs and revenue streams for contractors, suppliers, and other service providers. This influx of employment opportunities can inject capital into the local economy, which, over time, helps stimulate the housing market and raises property values.
2) Infrastructure Upgrades
Data centers require robust infrastructure, including power grids, roads, water lines, and telecommunication networks. These capital-intensive upgrades often benefit the surrounding area and increase property values as well. Improved infrastructure tends to attract other businesses and development, creating a desirable locality for both residential and commercial buyers.
3) Tax Revenues and Community Investments
Data centers are known for contributing significant tax revenues to local governments. These funds can be reinvested into community improvements, such as better schools, parks, and public services, further enhancing the area's livability and desirability for potential homeowners.
For instance, Loudoun County, Virginia, is home to several data centers. This has led to a substantial increase in tax revenue, estimated at $890 million. With the county’s total operating budget projected at $940 million, the impact is clear. Remarkably, data centers cost the county just $0.04 for every $1 of tax revenue generated, compared to $0.25 per $1 for traditional businesses. Thanks to this surge in revenue, Loudoun County boasts the lowest real property tax rate in Northern Virginia, which is approximately 25% lower than its neighboring counties. The additional tax revenue has also allowed the county to put $1 billion into roads and build 36 new schools over the last 15 years.
If you own or manage property, you can sell or lease it for a data center, supporting digital infrastructure and generating tax revenue for your community. To connect with data center developers and explore opportunities for your land or your client's property, list it for free on LandApp's marketplace to connect a nationwide network of developers actively seeking sites. There are no fees, commissions, or obligations- just the chance to get offers above market rates and contribute to your community's growth.
Potential Negative Impacts of Data Centers
While data centers bring significant economic benefits, their presence is not without potential drawbacks. These facilities can consume vast amounts of energy and water, contributing to environmental concerns such as increased carbon emissions and strain on local resources. Additionally, the rapid development of data centers may lead to land use conflicts, noise pollution, and increased traffic in surrounding areas, raising questions about their long-term sustainability and impact on local communities.
1) Noise and Aesthetic Concerns
Despite their economic perks, data centers may pose challenges for homeowners living nearby. The facilities often house massive cooling systems and backup generators that can emit considerable noise. While these noises are usually within legal limits, they may become a nuisance for residents and dampen property appeal in close proximity to the data center. Additionally, the design and scale of data centers can clash with surrounding architecture. These large, windowless structures can detract from a neighborhood's aesthetic appeal, potentially discouraging property buyers who value curbside appeal.
2) Environmental Impacts
Data centers consume massive amounts of energy and water to maintain climate-controlled environments for their servers. While many companies aim to reduce environmental impact through renewable energy sources and energy-efficient designs, or through placing these data centers near water treatment plants, some communities remain concerned about the resources required to operate these facilities.
3) Limited Direct Impact on Residential Real Estate
Unlike commercial developments such as retail malls or entertainment complexes, data centers do not tend to render direct benefits for individual homeowners or residents, which can foster resentment among those who see no direct advantage from the data center. The facilities do not draw large amounts of foot traffic or offer amenities that immediately influence residential desirability. In some cases, their presence is neutral or even slightly detrimental, depending on local perceptions and land-use policies.
Real-World Examples of Property Value Impact
The impact of data centers on property values varies depending on location, facility type, size, and the surrounding community. In some areas, they have boosted property values and drive economic growth. However, other communities have faced challenges like noise, high energy use, and negative environmental effects.
Positive Impact Example
There are numerous other benefits on top of the increased tax revenue that has resulted from data centers in Loudoun County. According to the Loudoun County Department of Economic Development, data centers have created 12,000 jobs. Data center development in Loudoun County has also attracted new businesses, stimulating economic growth and resulting in rising property values in the surrounding region. Local businesses have also experienced growth due to increased economic activity tied to construction and operational staffing.
Negative Impact Example
Conversely, in Council Bluffs, Iowa, where multiple data centers have set up operations, some residents have expressed concerns about noise and environmental degradation. Although these data centers bolstered tax revenue for public projects, their close proximity to residential zones has led to mixed opinions regarding long-term property investments in the area.
Key Factors That Influence Property Values Near Data Centers
Whether data centers increase or decrease property values is far from a one-size-fits-all scenario. While they bring undeniable economic advantages like job creation and infrastructure upgrades, challenges such as noise, environmental concerns, and visual intrusion can offset these benefits. Much of the impact on property values from data centers is dependent on how companies address community concerns and integrate themselves as responsible corporate citizens. The variation in property value outcomes near data centers often depends on a combination of factors, including:
Proximity to Residential Zones: Data centers placed too close to homes may face resistance from residents due to noise and visual intrusions, potentially driving property values down.
Local Economic Conditions: A booming local economy amplified by the data center's presence can stimulate real estate prices in surrounding areas.
Environmental Sustainability Efforts: Data centers that invest in renewable energy and minimize water usage are more likely to gain community acceptance, positively influencing property values.
Community Benefits: Investments in schools, roads, and utilities funded by tax contributions can create broader appeal for nearby neighborhoods.
Why are Data Centers Popping Up Everywhere?
Data centers are rapidly expanding and continue to show up in communities across the U.S., fueled by the explosive growth of data, the widespread adoption of cloud computing, and the rising demand for AI and machine learning. This increased need stems from both individuals and businesses embracing digital technologies, driving a greater demand for storage capacity and processing power.
Ultimately, when planned and managed well, data centers can serve as catalysts for growth, enhancing property values and transforming regions into economic hubs. Communities that proactively engage with data center operators on environmental sustainability, land-use policies, and community investments are more likely to see a net positive effect.
Property owners, real estate professionals, and local governments are uniquely positioned to benefit from the data center boom. If you own, manage, or represent public or private property, you can lease or sell it for a data center to support the growth of the digital infrastructure that supports our everyday lives and generate tax revenue for your community. Additionally, data center developers are often willing to pay premium prices for land that checks their boxes- like those located near fiber optic lines, in close proximity energy grid infrastructure, and within incentivized areas.
If you're interested in leasing or selling your property for a data center, list your property completely free on LandApp's marketplace to present your property to LandGate's nationwide network of data centers developer actively seeking suitable sites. There are no fees, commissions, or obligations to accept any offers- just the potential to be contacted by developers willing to pay above-market rates for your property.