Data Center Resources

While data centers have been the hottest topic in Texas over the past year, they’ve been around for much longer. Decades, in fact. The earliest “data centers” were those legendary giant room-sized computer mainframes, often built on military installations. As technology advanced and computers got smaller, data facilities started expanding outside of government property in the early 1980s, and the term “data center” became more common. A boom in personal computer use and the internet in the 1990s and the dot-com bubble around the turn of the century lead to the growth of network hubs, including the so-called “Data Center Alley” in Virginia. The industry’s shift to cloud computing and artificial intelligence has driven the most recent data center boom and the rapid expansion in Texas.

While the term “data center” can mean many different types of facilities, proposed developments most frequently will refer to one of four types of building.

Edge: Edge data centers are typically smaller, using between 1 – 10 megawatts of power. They are typically built near end users to increase internet speeds and support real-time applications. By design, they are widely distributed and built near urban or industrial areas to serve immediate needs. A subset of this type of facility is a micro data center, which are even smaller and designed to further reduce data processing latency. 

Enterprise: Enterprise data centers are facilities built by one organization for their own internal IT needs, and do not host data for other entities. Enterprise centers were more common in the late 2010s and early teens, but have since drastically fallen in market share. Enterprise facilities tend to be less energy and cost efficient, so most companies are now seeking other types of facilities.

Colocation: Colocation facilities are the commercial leasing opportunities of the data center world, wherein multiple tenants will share space (and power, cooling, etc.) in one building. Colocation facilities allow organizations to reduce overhead costs and are the second most common type of data center facility currently being constructed.

Hyperscale: Hyperscale data center are the headline-makers. These are the biggest facilities, often using over 100 megawatts of power, designed to support massive computing needs like AI, cloud storage, and large-scale data processing. Amazon Web Services, Microsoft, and Google own/operate nearly 60 percent of hyperscale facilities as of late 2025. 

A note on modularity and flexibility – data centers that are built in a way that can be reconfigured or modified can help extend the life of a data center facility. This could include modular structures like shipping containers, or even truly mobile facilities that can be moved to areas of need. This flexibility is also useful in disaster recovery.

The following sections include important questions community leaders will want to ask of their local elected officials when a data center project is being considered. We start with the basics of the facility, and then move on to specific topics that matter most to residents. 

What kind of project is proposed? Is it a “hyperscale” facility, or a smaller building?

How big is the parcel of land that is planned for development?

Is this a data processing and/or storage facility, or a different type (such as microchip manufacturing or cryptocurrency mining)?

Is this project being brought by a data company, or by a land developer that will seek a data center client after it is built?

Many of the most frequent concerns raised by local residents about a proposed data center involve water and electricity usage. These technologies are evolving quickly toward more efficient systems, but it’s still important to understand how the data center facility will be powered and cooled. And data centers can impact local infrastructure systems beyond electricity and water – be sure to pay attention to roadways and traffic plans, as well as proposals to mitigate costs to the community.

How much water will the proposed data center use for cooling?

From what source will the project draw it’s water? 

What type of cooling system will the proposed project use?

Technological advances in cooling systems mean some systems are far more water-efficient than others. Closed-loop systems and direct-to-chip or other immersive liquid cooling systems use minimal water as compared to open-loop or air-cooled systems.

What type of back-up or independent electrical generation will the project use?

Legislation passed in Texas in 2025 requires large (75 megawatt or greater users) data centers to have back-up generators that can be employed during times of peak demand.

If the project will use any solar or wind power, will that energy be added back to the electrical grid during times of low demand?

How will residential and small business consumers be protected from utility rate hikes if the data center is built?

Will the company/developer assume costs for roadway infrastructure on the facility site and connecting to it?

How will the developer work to mitigate traffic congestion and offset roadway wear-and-tear during construction?

How much of the total infrastructure needed for this project will be publicly funded versus privately funded?

Texas home-rule cities have zoning authority, and more control over what is built where inside their boundaries and potentially within their ETJs. Counties have less authority to dictate what can or cannot be built. In either case, there are questions that can be asked about how a data center will integrate with surrounding lands, and how it will function long-term.

Is the proposed project compatible with surrounding land uses?

Will the proposed facility be located at an adequate distance from homes or sensitive facilities?

What levels of noise, light or heat are expected to be experienced on nearby properties?

Does the proposal include plans for reuse or deconstruction of the facility and surrounding infrastructure if and when the project reaches the end of its life?

Depending on the size and scope of a data center project, hundreds or even thousands of construction workers may need to live temporarily near the project while it is being built. After construction is complete, the data center itself may have employee housing needs, or the project could simply be a draw for future economic development and growth… all leading to increased housing demand. Texas REALTORS® can offer a lot of expertise in this area to help their local elected officials think about managing both short- and long-term housing planning. 

How will the company/developer manage housing for temporary construction workers?

How many temporary workers are estimated to be needed during construction?

How many permanent jobs will be created at the facility?

How will the city manage increased demand for housing permits?

Will the local government work with real estate professionals to incorporate existing housing supply, future needs, and community capacity into housing plans?

Tax abatements are a common tool local governments can use to entice businesses to build and expand within communities. Tax abatements can be a win-win for local governments and businesses, but many people have concerns about the agreements being made with data center companies. It’s important to understand the terms of the agreement and sure there is a mechanism in place to hold the company accountable to the goals set forth. 

The State of Texas also offers a sales tax exemption to qualifying data centers. Learn more from the Texas Comptroller.

Will the city, county, and/or ISD offer a property tax abatement for the project? If yes, for how much and for how long?

If ISD tax abatements are offered, will that include maintenance and operations taxes only, or also debt services taxes?

What conditions will be put on the tax abatement offer?

Considerations could include (but are not limited to) goals for job creation, infrastructure investments, and community funding partnerships such as classroom resources.

How will the taxing entity monitor and hold the company/developer accountable to these conditions? Is there a method for rescinding the abatement if those conditions are not met? 

Many residents will understandably feel suspicious of a data center development if it feels like the project is shrouded in secrecy. Allowing residents to ask questions and feel heard is critical. Local elected officials need to be responsive to their constituents, especially when a data center project is proposed. In certain circumstances, some information may need to be kept private between the company and the local entity, but in general lawmakers are increasingly responding to constituent calls for more information to be made public about these projects.

Is the company/developer willing to regularly meet with community members to answer questions and address concerns?

Will there be a non-disclosure agreement made between the company/developer and the city/county? If so, can the local government communicate to constituents as to why some information needs to be classified and provide confidence that elected decision-makers have all information relevant to the project?