Report finds most data centers in urban, not rural, areas

Despite the industry’s narrative that many data centers are located in rural areas, a research report published late last month found that the vast majority are actually based in urban communities.

Researchers at New York University, writing in the peer-reviewed journal Nature Cities, found that of the 4,283 data centers they mapped in the United States, 97.5% sit inside metropolitan or micropolitan areas. The other 2.5% sit just 8.5 miles from an urban edge, researchers found, which they said shows there are very, very few truly rural data centers, if any.

Of the country’s data centers, researchers found that five metro areas — Washington, D.C., Chicago, Dallas-Fort Worth, New York and Phoenix — hold nearly a third. The Washington, D.C. metropolitan area alone has 610, the report says, which includes many in the Northern Virginia data center strongholds of Loudoun and Prince William counties.

“While we see in the media there is a focus on the construction of data centers out of cities, these are the figures,” said Ofek Lauber Bonomo, a postdoctoral associate at NYU’s Tandon School of Engineering and a co-author of the report. “It doesn't mean that data centers are not being built in rural areas. But the majority right now, not talking about in 5-10 years, are currently in these urban, densely populated areas. I think this is information that should be clear to the public; the narrative should be clear.”

Data center construction has been a hot conversation topic in numerous states in the past few years, as they seek to lead the way on development and help underpin the growth of artificial intelligence. But it has not been without its controversy, whether it be due to worries over environmental impact, noise and residents’ utility bills, among others. Several states now have moratoriums on new data centers as they try to install guardrails for their development, while local governments have done the same.

Despite that, a boom is promised in rural data center construction based on recent research. The Pew Research Center found in April that 67% of  planned data centers are set to be located in rural areas, with much of that construction set to happen in the South and Midwest.

Based on their research, the report found that existing infrastructure is a major predictor of where data centers will be located, including available power generation as well as broadband connectivity to allow for low latency. Indeed, the NYU researchers found that many data centers have clustered near closed coal plants, so they can tap into the grid infrastructure those power generation sites left behind.

The report also found that data centers under development are twice as likely to appear in a federally designated “Energy Community,” which were created by the U.S. Department of Energy as part of the Inflation Reduction Act in 2022 to direct clean-energy investment toward regions with ties to the fossil fuel and coal industries.

“We don't argue that there is a direct tax benefit to data center providers through [the IRA], but the idea is that by helping these communities with the energy transition and lowering the tax on the generation of green energy and lowering tax burden on these communities, somehow, indirectly, these data center providers can benefit,” Bonomo said. “On the one hand, they benefit indirectly through the tax, but also, they enjoy the old legacy infrastructure. There is a double benefit there.”

The researchers also found that data centers have traditionally clustered in areas with a high number of workers in IT and other technology fields that benefit from low latency and strong broadband connectivity.

One thing the researchers struggled with was a lack of readily available information about data center locations and the infrastructure and utilities they require. This NYU group is one of several currently looking to better collate and publicize that information, while other states have passed laws designed to mandate better transparency. For this report, and to track future development, a lot of data points need to be brought together.

“Part of the work will be looking at maps, scraping the internet, different queries, maybe one can use AI, there can be some crowdsourcing, several areas to get this information, but it's not as much,” said Maurizio Porfiri, the lead researcher on the report and a Tandon School professor. “What is even more alarming from my point of view is the [lack of] information about energy use. What are the sustainability implications, not only the location, but what is the impact? That one is, to the best of our knowledge, not coded and not as well-defined as it could be.”

Many new data centers may not be located in completely rural areas, either. Bonomo noted that some satellite images of construction sites may show something that is “basically a field,” but may only be 20 or 30 minutes away from a city center so they can draw on that infrastructure, which could impact residents.

“Even if it looks completely rural, there is usually a community there that is affected,” he said. “We need to keep that in mind.”