For the first time since 2020, the primary-market datacentre construction pipeline shrank, ending 2025 at 5,994 MW, down from 6,350 MW at the close of 2024. The shift marks a watershed moment for the US datacentre industry: a sector powered by unprecedented AI investment is hitting its limits not because capital has dried up, but because communities are saying no.
The figures paint a curious paradox. Vacancy rates fell to a record low of 1.4 per cent, even though supply increased by 36 per cent year-on-year to 9,432 MW. This is the signature dynamic of a market where demand has completely overwhelmed supply, and landlords are raising prices to ration scarce space. Average monthly rental rates for a 250 to 500-kilowatt requirement rose by 6.5 per cent to USD 195.94 per kilowatt per month, representing the fourth consecutive annual increase.
Yet here is where the story becomes genuinely interesting from a policy perspective. Community opposition increasingly disrupted planning approvals, reshaping the industry according to commercial real estate firm CBRE. This is no longer confined to isolated towns. Over USD 18 billion worth of datacentre projects were blocked, and another USD 46 billion were delayed over the last two years in the face of opposition from residents and activist groups.
The Loudoun County Precedent
In Loudoun County, Virginia, where there is a high concentration of server farms, public sentiment and workforce impacts are having repercussions for development timelines. The county is not simply debating; it has acted. On March 18, 2025, the Loudoun County Board of Supervisors approved amendments that eliminated by-right development of datacentres, requiring instead approval of a special exception through stringent legislative review and public hearings.
What makes this remarkable is its inevitability. Loudoun County had been the global datacentre capital, a position built on cheap land, proximity to power, and permissive zoning. For years, the formula worked. But demographic change and grid anxiety finally caught up. Communities fear the effect that facilities might have on energy prices, water supplies, and the environment through noise and pollution from generators.
Where Policy Meets Market Friction
From a centre-right perspective, this outcome deserves scrutiny. The datacentre industry has legitimate claims: these facilities drive economic growth, create tax revenue, and power the digital services millions depend on daily. Yet the opposition is not fringe NIMBYism but pragmatic concern about externalities.
In Indiana, households paid 17.5 per cent more in utility bills in 2025 than the previous year, despite new "80/20" laws touted as safeguards to make datacentres pay most costs. The mathematics are transparent: when industrial facilities drive grid expansion costs, someone pays, and it typically flows to ratepayers. Opposition cuts across partisan lines, with the left emphasising environmental concerns and the right often citing opposition to tax abatements, though concerns over power consumption have gained support across the political spectrum.
This is where reasonable fiscal conservatism must acknowledge a hard truth: incentives matter, and they have consequences. CBRE does not expect the number of datacentres under construction to increase much this year, with projects stalled at the planning stage due to permitting, zoning, and power procurement challenges. Capital cannot simply overcome resistance rooted in legitimate local concerns about infrastructure strain and cost-shifting.
Many planned projects remain delayed due to ongoing permitting, zoning and power procurement hurdles, underscoring the complexities of scaling infrastructure. This is not bureaucratic incompetence; it is the system working as designed, with local authorities accountable to residents.
The Pragmatic Path Forward
For the datacentre sector and policymakers, the conclusion is unavoidable: growth cannot continue on the terms of the past five years. CBRE forecasts rent growth to continue outpacing inflation for the next two to five years, but sustained price spikes will eventually constrain demand and drive capital elsewhere. International competition is real.
The reasonable middle ground recognises that datacentres are genuinely valuable infrastructure, but only if their costs are transparent and fairly distributed. Communities have a legitimate stake in the decisions that reshape their landscapes and grids. Conversely, gridlock serves no one; projects delayed indefinitely benefit neither residents nor industry.
What is required now is better information sharing and honest negotiation at the local level. Developers should come to communities with full accounting of power and water demands, and communities should engage substantively rather than reflexively. Tax incentives should be genuinely conditional, with clawback provisions if infrastructure strain materialises. And crucially, utilities and grid operators must be part of planning from the start, not added as afterthoughts.
The market has spoken: Vacancy rates are likely to remain at all-time lows for the near future due to limited new supply, and CBRE does not expect the number of datacentres under construction to increase much this year. This is not a sign of healthy supply management. It is a sign that the industry has run into real constraints, and only honesty about costs and benefits will unlock continued growth.