Atlanta Hits Pause on Data Center Boom Over Housing Shortage

Atlanta’s explosive data center growth has met local resistance, prompting city leaders to restrict new developments near transit hubs.

Jordan B. & Han-Gwon Lung
January 02, 2025

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Good morning. Atlanta’s explosive data center growth has met local resistance, prompting city leaders to restrict new developments near transit hubs. Plus, Fort Worth is now the fastest-growing city in TX, outpacing Austin.

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property report

Atlanta Presses Pause on Data Center Growth Due to Housing Shortage

Atlanta's booming data center industry is facing pushback as the city grapples with housing shortages and land-use conflicts.

Growing pains: Atlanta is leading the nation in data center growth, with power capacity surging 76% in the first half of 2024. By 2028, the city’s data load is projected to hit 4,000 megawatts—30 times its 2012 levels, according to Green Street. Tech titans like Meta (META), Google (GOOGL), Microsoft (MSFT), and X are flocking to Atlanta for its affordable power and attractive tax incentives.

total data center inventory grew by an average of 43% annually

Zoom out: Nationally, data centers thrived in 2024 as high interest rates dampened enthusiasm for other property types. Between 2023 and 2024, total data center inventory grew by an average of 43% annually—far outpacing the under-3% growth in multifamily, hotels, and self-storage properties.

Community pushback: In September 2024, Atlanta’s city council banned new data centers near transit hubs and the Beltline, areas critical to housing and retail development. With a metro housing deficit of 100,000 units, Mayor Andre Dickens emphasized prioritizing urban projects that directly benefit residents.

The economic debate: While data centers generate property tax revenue and reuse underutilized office spaces, critics point to their limited job creation. Georgia Power projects demand from data centers and similar developments could hit 36,500 megawatts by the mid-2030s—far exceeding its current 21,500-megawatt capacity. This could displace industries with greater economic impact.

➥ THE TAKEAWAY

The bigger picture: Data centers have revitalized vacant office spaces but worsened Atlanta's housing shortage and strained resources. As AI drives rising computing needs, cities like Atlanta and Northern Virginia must find ways to balance tech-driven growth with sustainable urban development.

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✍️ Editor’s Picks

Automation nation: Denver is investing $1.3M in AI to automate and streamline the city’s permitting process, aiming to cut review times for residential and commercial projects in half by Summer 2025.
Phase-down alert: 100% bonus depreciation could return for commercial property owners as Congress debates tax incentives amid current reductions to 60% for 2024. (sponsored)
Cowtown boom: Fort Worth is now the fastest-growing city in TX, outpacing Austin with 7.7% population growth since 2020 and driving up demand for offices, industrial, and multifamily.
Sales surge: Bay Area home sales rose 9% from January to November 2024, the first such increase in two years, thanks to a dip in mortgage rates and a highly competitive market.
Crystal ball: Wells Fargo economists predict a positive shift for CRE in 2025 as vacancy rates improve and banks start to return to the market as key lenders.

🏘️ MULTIFAMILY

Carbone condos: Developers secured a $285M loan to fund Villa Miami, a 56-story luxury condo tower branded by Major Food Group, merging high-end living with exclusive dining experiences.
Luxury demand: Rising demand for high-end apartments is driving up rents for affordable 1- and 2-star units, with their annual rent growth outpacing even the luxury market.
Sign of stability: HomeStreet’s sale of a $990M multifamily loan portfolio for 92% of its value suggests the CRE market might not be as distressed as some investors had hoped.
Retail-to-residential: Related California is set to replace the Regal Edwards Big Newport movieplex near Fashion Island with two luxury condo towers, adding 140 units to the area.
Garden State loan: S3 Capital provided a $59M construction loan to Arilex Realty for a 12-story residential tower at 7711 River Road in Edgewater, NJ, slated for completion by late 2026.

🏭 Industrial

Supply meets demand: Colliers predicts industrial vacancy will peak in mid-2025 as supply and demand stabilize, with modest rent growth thanks to last-mile delivery and automation-driven demand.
Zoning changes coming: Austin will review proposed zoning changes in early 2025, including new PDA2 and DB240 designations, aiming to regulate residential development in industrial zones while allowing for more mixed-use projects.
Prime property acquisition: Terreno Realty (TRNO) bought a 76%-leased, 495 KSF industrial property in Doral, FL, close to major transport hubs for $195.6M (with a stabilized cap rate of 4.6%).

🏬 RETAIL

E-commerce pressures: Major US retailers faced a tough 2024, with 7,327 store closures—up 57.8% from 2023—driven by changing consumer habits, inflation, and e-commerce dominance.
People are still people: Retail rents rose in 2024, with prime business and vibrant mixed-use districts seeing nearly 10% annual growth, driven by limited retail space and high demand.

🏢 OFFICE

Resurgence: U.S. office sales rose 17% in 2024, driven by distressed deals and equity conversions as landlords adapted to falling valuations and high vacancies.
AI needs offices: Semiconductor innovator Astera Labs (ALAB) will triple its space by relocating its HQ to a 154 KSF San Jose campus, as more AI demand fuels Silicon Valley’s office market recovery.
Blend and extend: Lyft (LYFT) renewed its lease for 170 KSF at its San Francisco HQ in China Basin through a 10-year “blend and extend” deal, shedding 165 KSF previously listed for sublease.
Stability amid challenges: KBS Realty Advisors obtained a 3-year extension on a $375M loan for Chicago’s Accenture Tower, bolstering its position with renovations and high occupancy.