In 2025, we predicted a strong push to re-shore manufacturing to US shores with Trump’s tariff plan unfolding. The legal uncertainties still swirling around the tariff policies has bridled back the expected demand for re-shoring. There has been another push by the Trump administration to “win the AI race” with China. This is a laudable goal along with the re-shoring of manufacturing. However, it has become apparent that there is competition for resources between these two goals. The most pressing competition is for scarce infrastructure resources.
New Industrial Park Locations in the Southeast
We have been searching out new industrial park locations throughout the Southeast US over the last couple of years. We are happy to say we have new locations coming out of the ground in Aiken County, South Carolina; Grenada County, Mississippi; Cookeville, Tennessee; and, Sweetwater, Tennessee. As an example of the competition for infrastructure, a new industrial park with ten buildings and 1,000,000 SF to 2,000,000 SF will need between 10 and 40 megawatts of electricity, and it will support over a thousand jobs that have economic impact on their respective communities measured in the billions per year once built out.
Infrastructure Competition: Industrial vs Data Centers
On the other hand, a single AI dedicated data center project may bring a hundred jobs; but, the power requirements are an order of magnitude greater. A single data center can use 250 – 400 megawatts. Data center developers have been chasing electrical distributors with excess capacity in their system. The power generating utilities servicing those distributors are now having to get involved, because the loads for data centers are approaching the size of an entire power plant. This is the rub on who gets the power that is available and who gets to wait five years for new power plants to be built.
Utility Constraints and Delays
Electrical utilities are highly regulated and are rarely free to speculate on growing demand to stay ahead of the curve. Paying customers have to show up and get in line for capacity to be brought on-line. If generating capacity is sufficient but a new substation is required, then it is a two-year delay. If additional generation capacity is needed, the best possible case for a utility company is five years. That “short” time frame scenario is for natural gas turbine electrical generation. This portends the next critical shortage…natural gas.
Data Centers Shifting Strategy
Data center developers have already switched their focus from electrical grid capacity (which is practically gone at the scale they need) and are now focusing on locating their centers along natural gas transmission pipelines so they can buy and operate their own gas turbine generators. Private data center developers will be able to move more quickly than the utility companies; and, as long as they serve only their own data center, they will not be burdened by the same regulations that constrain the electrical utility companies.
Water Capacity and Site Selection
Data centers also are high-capacity water users for cooling needs. This competes with industrial plants high demand for fire protection water. This trifecta of infrastructure availability: water, gas, and electricity are what is driving site location decisions more than ever before. Real estate professionals have long held that value in real estate which was based on three things: “Location, Location, Location.” Today, the three things have become: “Infrastructure, Infrastructure, Infrastructure.”
To explore how infrastructure availability is shaping industrial site selection and development, visit our services or available properties pages, or contact our team to discuss opportunities.
