Reading this article likely uses data center assets. 

That, along with AI, cloud computing, faster data processing like 5G and other data uses, is creating the need for more data centers. Data centers need to be located close to where people live, and an exploding population is driving exponential numbers of physical facilities that house the servers, switches, routers, firewalls, software and applications required for an increasingly data-driven world. 

It is also causing some conflicts with residents who live in areas near these data centers, who point to the centers’ use of increasingly strained energy and water resources. 

That is certainly the case in fast-growing Dallas-Fort Worth, said Phoebe Bernet, an associate at real estate firm CBRE. 

“Demand is crazy everywhere,” she said, but particularly in Dallas and Fort Worth, which ranks second behind Northern Virginia for data center growth. 

“There are specific reasons why Dallas, Fort Worth, this area, is getting a close look,” Bernet said. “We have a ton of available land, it’s all flat and that’s attractive to developers and hyperscalers. And, for the most part, we have the power, maybe not right now, right this minute, but we will have the power eventually.” 

Data center space under construction in Dallas-Fort Worth hit record levels during the first half of 2024 and doesn’t show any sign of slowing down, according to CBRE’s latest North American Data Center Trend Report. 

The report says under-construction activity totaled 472.1 megawatts in the Dallas-Fort Worth area, a nearly 73% increase year over year. Of the space under construction, a record 94.5% has been released, giving the market little flexibility as overall vacancy shrunk to 4.4%. 

“Data center activity levels are unprecedented,” said Chris Herrmann, senior vice president with CBRE’s Data Center Solutions group. “Never in the history of our industry have we seen a greater number of hyperscalers and colocation operators scour the DFW market sites for the next wave of data center development.” 

While all this development is a boon for growing tax bases in cities, it is also a strain on a region’s power and water supplies, said Mohammad Atiqul Islam, an assistant professor in the computer science and engineering department at the University of Texas at Arlington. 

“One of the challenges data centers are facing is the available capacity that they use on the local grid,” he said. “These data centers cannot be in the middle of nowhere.” 

And, Islam said, the local power grid is already strained by a growing population and a burgeoning business base. 

That was a concern of several Panther Heights residents during a recent hearing for a proposed data center on 121 acres near their neighborhood in southwest Fort Worth. 

Ericka Schwan-Ornelas, a Panther Heights resident, cited traffic, light pollution, energy consumption, water use and noise as issues of concern related to the data center. 

“Many of us believe this land would be better used for a retail or commercial center,” she said. 

Some area residents, though, supported the data center plans, noting that, once construction was complete, the data center would not result in much more new traffic for the area. 

The City Council approved the zoning change Sept. 17, though developers must still provide a site plan for the center. 

City Council member Jared Williams, who represents District 6 where the project is located, said that, once built, the project’s taxable value would be $750 million. That total makes it close to, if not one of, the top five taxable projects in the city, he said. 

That taxable value makes them very attractive to municipalities, said UTA’s Islam. 

“These data centers are not big in terms of creating employment,” he said. “However, they do contribute to the local government through taxes, through business property taxes, because these sites have very expensive equipment in them and they are constantly upgrading.” 

An average data center can cost up to $200 million or more to construct, said Curt Holcomb, executive vice president at JLL. The wages paid to workers building the data center will add to the tax base over the course of construction, he said. 

“Combined with the expensive, high-technology equipment housed within, which can be in the billions, owners and operators are often paying hundreds of millions in taxes to the municipalities they’re located in over the course of their operation,” he said. 

While data centers typically require many resources, there are some changes coming, said Holcomb. 

“Many data center companies are looking at alternative sources for power, such as nuclear, natural gas and hydrogen,” he said.

He noted that Amazon Web Services acquired a data center campus powered by nuclear energy in Pennsylvania that allows Amazon to purchase carbon-free energy directly from the nuclear operator, therefore leaving power on the grid for others to use.

Fort Worth, Holcomb said, is uniquely positioned to supply natural gas to data center operators for on-site power generation. 

“There has been an increase in interest from data center developers looking to acquire land sites that have an abundant supply of natural gas, so they can place electricity-generating turbines fueled by natural gas on-site,” he said. “This allows data center developers to work hand-in-hand with the Texas energy industry to devise creative solutions for powering these massive developments.” 

In addition, said UTA’s Islam, companies with data centers can fairly easily switch to other remote data centers if a data center in the area is straining resources in one area. 

How do data centers differ from crypto or Bitcoin mining? 

Both are technically data centers. However the form and function of a traditional data center and crypto, or Bitcoin mining, are quite different.

“Traditional data centers house enterprise servers, similar to equipment found in one’s personal computer, but on an industrial scale, as these centers are servicing entire businesses, or multiple organizations. Because of this, server downtime must be avoided at all costs, leading data center owners and operators to build in redundancy, both in terms of power and connectivity,” said Curt Holcomb, executive vice president at JLL.

Crypto or Bitcoin data centers serve one purpose: to “mine” electronic currency by using specialized hardware and software, essentially solving “a complex, ever-changing puzzle,” said Holcomb. “Since progress can be paused while solving this puzzle, crypto data centers are able to be ‘turned off’ when necessary to conserve power,” he said. 

Also, he said, crypto or Bitcoin data centers only need an internet connection and access to power, and therefore can be built in remote locations if there’s access to the internet.

Residents in Granbury have raised concerns about a Bitcoin mining center that has caused noise pollution in the area. 

Top five largest data center markets 

Northern Virginia 2,611.1 megawatts 

Dallas-Fort Worth 591 megawatts

Chicago 589.6 megawatts

Phoenix 510.8 megawatts 

Silicon Valley 459.2 megawatts 

Source: CBRE 

Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. 

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