Data center construction, long considered a bright spot in an otherwise sluggish building market, is encountering growing headwinds as projects stall before breaking ground due to power shortages, community resistance and regulatory uncertainty.
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Developers pursuing large-scale, gigawatt-level data centers are finding it increasingly difficult to move forward, as the industry grapples with infrastructure limitations and heightened scrutiny from local governments and residents.
Access to sufficient power remains one of the most significant barriers. The scale of data center developments has expanded dramatically in recent years, placing unprecedented demands on utility networks.
“A few years ago, a 100-megawatt lease would have been considered a massive build. Today, projects over 1,000 megawatts are setting the benchmark,” said David Guarino, head of global data center and tower research at Green Street.
The rising energy requirements not only complicate project planning but also contribute to higher costs and delays, particularly in regions where utilities cannot guarantee timely power delivery.
In addition to infrastructure challenges, public opposition has emerged as a critical factor slowing development. Concerns over rising electricity costs, environmental impacts and land use have prompted community groups and policymakers to push back against new projects.
Data center project cancellations climbed sharply to 25 in 2025, up from just six in 2024 and two in 2023, according to research from Baird analyst Justin Hauke.
“The number one concern we have in the market right now is public sentiment,” said Rob LoBuono, principal at design firm Gensler, speaking at the New York Build conference.
At least 188 local opposition groups are now active across 40 states, contributing to delays and, in some cases, project cancellations. Several states are also considering legislation that could further restrict development.
In Maine, a bill that would halt construction of data centers larger than 20 megawatts until late 2027 is awaiting action from Gov. Janet Mills. Meanwhile, developers in Virginia have already shelved a planned data center campus near the Manassas National Battlefield, reflecting the growing influence of community and political pressures.
Even when projects clear regulatory and community hurdles, challenges persist during construction. Long lead times for critical electrical equipment continue to slow progress across the sector.
“The biggest bottleneck we are seeing is on long-lead electrical equipment. Switchgear, transformers and generators are all running extended lead times, with medium voltage switchgear often at 40 to 60-plus weeks,” said Brennan Church, director of engineering, procurement and construction at data center developer Hut 8.
“A shell can be completed and mechanically roughed in, but if the gear isn’t onsite, you’re not energizing,” Church added.
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These delays mirror supply chain issues seen during the advanced manufacturing boom in recent years, but data centers face an added layer of complexity due to their dependence on reliable and timely power access.
“This is a common challenge across the industry right now. A site can look perfect on paper, with strong land and fiber access, but if the utility cannot commit to a firm delivery timeline, the project stalls,” said Church. “What looks viable on paper usually breaks down on power, permitting or labor, and sometimes all three.”
As a result, contractors are increasingly prioritizing projects with secured power availability, avoiding the risk of mobilizing crews only to face prolonged delays awaiting energization.
Despite these obstacles, demand for data center capacity continues to grow, driven by hyperscalers and emerging cloud providers.
“Lease sizes are getting significantly larger, driven by both neocloud and hyperscalers,” said Guarino. “I wouldn’t say one is leading the charge, but both groups are collectively pushing forward.”
Originally reported by Sebastian Obando, Senior Reporter in Construction Dive.
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