Georgia has overtaken Northern Virginia as the country’s most active data center market. According to CBRE’s 2024 North American Data Center Trends Report, metropolitan Atlanta recorded 705.8 megawatts (MW) of net absorption, nearly 39 times its 2023 total. Inventory in the region increased by 222%, while its construction pipeline now exceeds 2,150 MW, making it the largest among all primary data center markets. This surge has been fueled by a combination of hyperscale leases, AI-driven compute demand and major infrastructure investments, including Amazon Web Services’ $11 billion expansion in Georgia. The state’s affordability, available land, robust fiber networks and favorable tax climate contributed to its emergence as a leading destination for large-scale digital infrastructure.
Policy Pressures Mount: Infrastructure, Incentives and Environmental Impacts Under Review
State and local officials are asking whether Georgia’s infrastructure can keep up with the accelerated growth rate. Power delivery timelines have become one of the most pressing concerns. Utility companies report substation constraints and multiyear delays in transmission upgrades in areas of high data center concentration. In response, the Georgia Public Service Commission approved the creation of a new tariff class to ensure large load customers, particularly data centers, pay proportionately for their electricity use without shifting costs to residential or small-business ratepayers.
Tax incentives played a major role in Georgia’s rise as a data center hub. Chief among them is the state’s sales and use tax exemption for qualifying data center equipment. However, this incentive faces increased scrutiny. A 2022 state audit revealed that Georgia recoups only 24 cents on the dollar for each incentivized project, raising concerns among lawmakers about whether the economic return justifies the public cost. In 2024, the General Assembly passed legislation aimed at temporarily suspending the exemption, but Gov. Brian Kemp vetoed it. Nevertheless, the conversation around tax reform continues, with several legislators exploring performance-based incentives tied to job creation, community investment or sustainability benchmarks.
Beyond infrastructure and incentives, environmental impacts increasingly shape the public and legislative discourse. Recent testimony before the Georgia House Special Committee on Resource Management estimated that the state’s existing and planned data centers will require 68.5 million gallons of water per day. Most of the water is consumptive and not returned to the system. Additionally, backup diesel generators pose localized air quality risks, while rapid land acquisition for data center campuses raise concerns about sprawl and displacement. In response, some metro-area governments implemented zoning restrictions or moratoria to manage growth and preserve land for housing or more labor-intensive industries.
Strategic Considerations for Market Participants
The pace of growth in Georgia’s data center sector remains unmatched, but the policy environment is more complex. Developers and operators must contend with a changing mix of infrastructure constraints, political pressures and evolving compliance expectations. Soon, delays in permitting or power delivery, changes to incentive structures and increased oversight of resource usage may impact site selection, project timelines and financial planning. Companies entering the market along with those already operating in Georgia will need to incorporate a broader set of risk factors into their growth strategies and stakeholder engagement efforts.
Learn more about the data center industry capabilities of McGuireWoods and McGuireWoods Consulting. For additional insight into Georgia’s evolving data center landscape, please contact our team.