NIMBY is creating the biggest data center moats

A few months ago, I wrote about a proposed $3 billion data center in my hometown of Spartanburg, South Carolina. Called Project Spero, it was supposed to facilitate the nation’s artificial intelligence (AI) buildout.

TigerDC, the company behind it, had already secured steep property tax incentives from the local government. And it seemed like the project was a go until local residents rose up in arms.

They might not have come out with pitchforks, tar, and feathers. But they made themselves clear nonetheless: Data centers were not welcome in their neighborhood.

And so the proposal fell through.

At the time, I thought the negative sentiment was Spartanburg-specific. But I’ve had to rethink that opinion since… in part because of Spartanburg itself.

You see, we already had a massive data center under construction when all the drama went down. A $2.8 billion state-of-the-art, high-performance computing center designed to support engineering and technology efforts, it’s supposed to open later this year.

I posted a video on X earlier this week, and here’s an aerial of the site:

Yet a group of my fellow residents just announced that they’re suing both the local government and the data center company, Valara Holdings, for classifying the project as a “minor land development,” allegedly to avoid a public review process. Which they figured they wouldn’t fare well in.

I guess they already knew that public sentiment the whole country over was turning against AI. And now that I know it too, I know a way investors can work with it to make more money still.

Data centers themselves aren't anything new. They’ve actually been around for decades, and few people thought to protest them for the majority of that time.

But they’re getting bigger, more expensive, and more resource-draining now that artificial intelligence (AI) depends on them. And so communities are deciding that they don’t like them.

Not one bit.

It’s understandable in many ways. People are now forced to see how the so-called “cloud” is really reliant on physical, solid, grounded, buildings and equipment that consume impressive amounts of electricity and water.

AI then amplifies those needs to sometimes worrying levels, allegedly adding to individual’s already painful utility bills in the process. Moreover, these bigger, more powerful data centers reportedly make humming noises that some people describe as outright torturous.

So yeah. It shouldn’t be surprising that, according to a recent Reuters/Ipsos poll, Americans are increasingly unimpressed with the nation’s data center buildout. Only 21% support it, with around 44% in the opposition camp.

And let me tell you… that 44% is active. They’re flooding social media channels with their not-in-my-backyard (NIMBY) campaigns, organizing communities, and holding rallies all around the country.

It’s not just Spartanburg that canceled an entire data center project. More and more stories are popping up about projects being delayed or outright dismissed. Maryland. Pennsylvania. Idaho. Texas… They’ve all seen the death of billion-dollar data center projects recently.

It almost seems like the little guys are winning this war. Maybe they will in the end.

That doesn’t necessarily mean the big guys will lose, mind you. They might just have to get more creative in their efforts.

(No, not like lying about the size of their projects. I mean legal and even ethical levels of creativity.)

One way or the other though, I know who will come out ahead…

You see, the world’s largest companies are spending a staggering amount of money on AI and AI infrastructure.

The five largest hyperscalers alone – Amazon Web Services, Microsoft Azure, Google Cloud Platform, Meta Platforms, and Oracle Cloud – are tracking to spend $750 billion on capital expenditures this year. Add in all the other AI players of varying size, and I wouldn’t be surprised if it was close to a trillion dollars that will be spent in 2026.

All of those AI efforts mean that data center demand is exploding… while supply is getting more and more difficult to come by. When that happens, the result is always the same.

Existing assets become much, much more valuable.

This is why established data center real estate investment trusts (REITs) are looking better than ever, including:

Prologis (PLD), the world’s largest industrial landlord, has been pursuing data center opportunities for a few years now. And American Tower (AMT) is a notable addition to the list as well thanks to the newly acquired CoreSite.

As such, these companies control some of the world’s most desirable real estate. Highly specialized real estate at that.

Data center facilities have to be constructed just so with specifically designed structures, power supplies, and cooling capabilities. But even beyond that, REITs that run them have established relationships with the local governments.

Plus, they’re very well-funded. And they often already own assets in key markets that are protesting any new development ideas.

That last detail is enormous considering how – even when residents are okay with data centers being built in their backyards (which many of them are clearly not) – it can take up to 10 years to navigate grid constraints, environmental reviews, zoning legalities, and actual construction timelines to get a data center campus up and running.

That also makes existing supply more valuable.

In fact, everything about these modern times seems to make data centers more valuable each new year. I began covering them over a decade ago when I first recommended buying Digital Realty around $65 per share.

Today, it’s almost $178 thanks to greater digitization of basically everything… the ongoing space race between companies like SpaceX (SPCX) and Blue Origin… and, of course, AI advancements. So, going forward, who knows what else is in store for us in this ever-changing world?

Whatever it may be though, it’s probably going to be bullish for data centers.

For the record, I do understand why communities are concerned about the data center buildout. And I completely agree that developers and local governments need to be transparent.

Communities deserve to understand how these projects impact their cost and standard of living. The will of the people matters, and their concerns should be taken seriously.

It’s just that, as an investor, I also have to recognize and respect secular trends… like the one showing that the AI revolution is here to stay. Ipso facto, all this technological power needs to be housed somewhere.

That means every canceled data center project makes existing properties more valuable. And every landlord that can build a new one becomes that much more attractive.

Now, don’t fool yourself. Quality still matters, as does value.

You don’t want to be buying up just any company that says it’s investing in data centers. You can read my writeup on Fermi (FRMI) here for proof of that.

Nor do you want to buy in at any price the market presents. (Fermi serves as a solid warning in that regard, too.)

But I do think every investor out there needs to seriously consider buying in nonetheless. There’s too much money, too much interest, and too much power backing the data center buildout.

In which case, the REITs and other landlords that intelligently tie themselves to that trend are going to be hard to beat.

Happy SWAN investing,

Brad Thomas
Editor, The Wide Moat Daily

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