AI Data Centers: A Comprehensive Guide to Location Criteria

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Artificial intelligence is accelerating the buildout of specialized data centers, and power availability has become the main constraint on where new facilities can be developed. Recent forecasts indicate that U.S. data center power demand is expected to rise from 31 GW in 2025 to 41 GW in 2026, reaching 66 GW in 2027—more than doubling in just two years. Consequently, site selection for data centers is increasingly favoring locations that leverage geospatial technology and location intelligence, enabling faster access to power, stronger grid capacity, and greater flexibility to incorporate onsite generation.

AI data centers are no longer defined solely by compute needs; they are increasingly influenced by factors like electricity, land, and interconnection timelines. With the rise of geospatial technology and location intelligence, developers are now prioritizing regions that can deliver power quickly, support large campuses, and reduce permitting delays. This shift has resulted in a more selective market where power-rich geographies are gaining prominence, while legacy markets face tighter constraints.

Successful deployment of AI data centers relies on a more focused yet demanding set of site-selection criteria compared to traditional cloud infrastructure. Key factors include power availability, speed to power, land for expansion, fiber connectivity, and resilience against climate and regulatory risks. Utilizing geospatial technology and location intelligence, the best sites are now those capable of supporting large-scale AI loads without requiring operators to endure lengthy waits for utility delivery.

The biggest challenge for the expansion of AI and geospatial technology lies in securing sufficient reliable electricity for data centers. Goldman Sachs Research now anticipates that U.S. data center power demand will increase from 31 GW in 2025 to 41 GW in 2026, and further to 66 GW in 2027. During this period, data centers' share of total U.S. peak summer power demand is expected to rise from 4.1% to 8.5%. However, only about 50% to 60% of the capacity projected for the next one to two years is likely to go online as planned, which reflects challenges such as delays, cancellations, supply chain issues, and labor constraints that affect location intelligence in the industry.

High-speed connectivity remains essential for data centers, particularly for AI workloads that move large amounts of data across training, inference, and storage systems. With geospatial technology and location intelligence becoming increasingly important, sites need strong fiber access, multiple carriers, and route diversity to reduce latency and limit risks of single-point failure. While connectivity is still a core requirement for data centers, it is now secondary to power in many site-selection decisions.

The strongest U.S. markets for data centers are increasingly those with available land, natural gas access, faster permitting, and room for utility expansion. Bloomberg Energy’s 2026 report highlights that Texas and the Southeast are gaining market share, primarily due to their ability to offer land and power more readily than legacy hubs. Additionally, with the integration of geospatial technology and location intelligence, Goldman Sachs notes that reliability risk is rising in the Mid-Atlantic, Mid-Continent, and Northwest, while Texas and Georgia face less severe tightening because of planned generation additions.

The major established markets still play a crucial role, but the center of gravity is shifting. Texas and Georgia are poised to absorb more growth in the data centers sector, while states like Virginia, California, Oregon, Iowa, and Nebraska are anticipated to lose market share by 2028. This shift reflects a simple reality: the development of AI and geospatial technology is now following power availability rather than mere proximity to end users, underscoring the importance of location intelligence in determining market dynamics.

Building AI data centers remains expensive, and costs are rising as power density increases. Higher-capacity sites, enhanced by geospatial technology and location intelligence, require more robust electrical systems, larger land footprints, and more complex cooling and backup power designs. The economics increasingly favor developers that can secure power early, as delays can quickly erode returns and market timing.

Onsite power is becoming a permanent aspect of data center planning rather than just a backup option. Bloom Energy’s 2026 survey found that many operators anticipate a greater reliance on onsite generation, with the report noting that one-third of hyperscalers and colocation providers expect to operate data centers entirely on onsite power by 2030. The same report indicates that data centers are increasingly adopting high-voltage busways and direct current architectures, leveraging geospatial technology and location intelligence to support higher power density and faster deployment.