What's Happening?
The National Association of REALTORS® (NAR) has released a report titled '2026 Data Center Impact,' which investigates the effects of the growing number of data centers on local real estate markets across the United States. The report, which does not
take an official policy stance, analyzes county-level data on home values, employment, and electricity costs, alongside survey feedback from real estate agents. NAR's chief economist, Lawrence Yun, stated that there is no singular 'data center effect,' and the impact varies significantly by local market. The analysis found that 92% of over 3,200 U.S. counties tracked have no mapped data centers, with only 1% having 10 or more. Data center growth is concentrated in limited areas, including Northern Virginia (21% of national data centers), Silicon Valley (5%), central Ohio (5%), the Phoenix area (4%), and central Washington (4%). These areas tend to be higher-cost housing markets with strong long-term housing appreciation and job growth, though the report clarifies that data centers do not necessarily cause these increases.
Why It's Important?
The proliferation of data centers, driven by the AI boom, has significant implications for U.S. real estate, local economies, and infrastructure. While data centers are often located in areas with existing strong housing markets and job growth, their presence can lead to increased residential electricity rates, with counties having 10 or more data centers experiencing a 21.4% increase from 2020 to 2024, compared to 15.7% in counties without them. Real estate professionals have mixed views on the impact on residential property values, with 25% seeing a positive effect, 22% a negative effect, and one-third unsure. However, the impact on commercial properties is viewed more favorably, with 50% of agents reporting an increase in commercial property values and 42% an uptick in demand for nearby commercial space, particularly industrial properties. This suggests that data centers can attract economic development and infrastructure investment, benefiting the commercial real estate sector.
What's Next?
As data center development continues, more U.S. home sales are projected to occur within five miles of an active large data center, with Realtor.com forecasting this figure to double by the end of 2027 compared to 2018. Homebuyers in these areas will need to consider factors such as noise, water usage, power infrastructure, and utility costs. Local municipalities are increasingly addressing concerns related to data centers, such as water consumption, by implementing mitigation strategies like water reclamation sites. Real estate professionals advise clients to research local government initiatives to minimize potential adverse impacts. The ongoing expansion of data centers will likely continue to shape local real estate markets, influencing property values, utility costs, and commercial development, necessitating continued monitoring and adaptation from stakeholders.
Beyond the Headlines
The growth of data centers raises deeper questions about resource allocation and environmental sustainability in the U.S. The significant energy and water demands of these facilities, particularly for cooling systems, pose challenges for local communities and infrastructure. While the NAR report indicates that electricity rate increases are not consistently tied to the number of data centers, and water usage concerns are being addressed by some municipalities, the long-term environmental footprint remains a critical consideration. The mixed perceptions among real estate agents regarding residential property values highlight the complex interplay between economic development and quality of life. This trend also underscores the increasing integration of technology infrastructure into daily life, potentially leading to new zoning regulations and community planning strategies to balance economic benefits with environmental and residential concerns.
