Zoning and Land Use Considerations for Data Centers Insights| LightBox

As demand for cloud computing, streaming, AI applications, and enterprise digital services continues to grow, data centers have become essential infrastructure—and a zoning challenge for many municipalities. These large, utility-intensive facilities don’t neatly fit into traditional commercial or industrial land use categories, leaving local governments scrambling to catch up with the pace of development.

From power demands to community impact, data centers raise a distinct set of zoning considerations. This blog explores the key issues local authorities and developers must address to ensure thoughtful integration of data centers into the built environment.

Defining Data Centers in Zoning Codes

Many jurisdictions now recognize “data centers” or “server farms” as specific land uses, but definitions and classifications vary. Some zoning codes lump them in with light industrial uses, while others treat them as standalone categories due to their unique combination of high energy usage, low employment density, and physical security needs.

Without clear definitions, data center projects can be delayed by uncertainty or misclassification. As Alan Hall, zoning expert with LightBox PZR, noted, “When data centers came on the scene in the early 1990s, many municipalities were unfamiliar with the term ‘server farm’ and assumed the property had some type of agricultural use. We’ve helped countless data center developers and owners navigate the many complexities of these unique properties.”

Utilities, Infrastructure, and Environmental Impacts

Data centers place a unique strain on local utilities. They consume massive amounts of electricity and, in some designs, water for cooling. Zoning and land use reviews must account for whether the local grid and water systems can support the facility—particularly in areas with limited infrastructure.

Environmental considerations also come into play. Cooling systems and diesel backup generators can create air quality and noise concerns. Some municipalities may require public hearings, environmental impact studies, or operational limits to ensure compliance with sustainability goals.

Location Strategy: Industrial Corridors, Tech Parks, and Renewable Hubs

Ideally, data centers are located in industrial or heavy commercial zones with existing infrastructure and sufficient buffer from residential areas. Tech parks and purpose-built data campuses offer the space, connectivity, and access to utilities that these facilities need.

In some regions, proximity to renewable energy sources like wind and solar farms is a strategic advantage. Local governments may offer tax incentives, infrastructure upgrades, or fast-track permitting to attract data centers that align with their economic development and sustainability goals.

Physical Design and Site Planning Considerations

Security is a core requirement for data centers, which often feature perimeter fencing, surveillance, and restricted access. These elements must be reconciled with local ordinances around landscaping, lighting, and building aesthetics—especially in areas adjacent to residential zones.

Zoning codes should also address height limits, mechanical screening for rooftop equipment, and special considerations for sound attenuation, especially for backup generators and cooling infrastructure.

Economic Tradeoffs: Low Employment, High Tax Revenue

Despite their size and value, data centers generate relatively few long-term jobs. A hyperscale facility may employ dozens, not hundreds, of full-time workers once operational. For communities focused on job creation, this can be a sticking point. Still, these facilities often represent some of the most valuable real estate in a municipality, generating substantial property tax revenue that can fund schools, emergency services, and infrastructure upgrades. Zoning boards must weigh short-term employment considerations against long-term fiscal stability.

Tailoring Codes to Different Data Center Types & Communities

Not all data centers are built the same—or require the same zoning approach. Hyperscale facilities, typically developed by cloud giants, demand vast land parcels, robust infrastructure, and physical security. In contrast, colocation centers often operate within suburban office parks, while edge and micro data centers—designed to reduce latency for end users—can be tucked into retrofitted retail centers or positioned near telecom hubs.

This wide range of footprints and functions means zoning frameworks must be adaptable. Applying the same rules to every facility risks stalling innovation or burdening smaller projects with unnecessary red tape. Communities looking to support digital infrastructure need zoning codes that are flexible enough to accommodate growth, without compromising oversight.

At the same time, the long-term land use implications must be considered. While data centers generally have low impacts on schools, housing, and traffic, their presence—particularly in rural or transitional areas—can reshape development patterns over time. Aligning data center planning with broader economic, environmental, and infrastructure goals will be key to ensuring these facilities support sustainable, community-centered growth.

How Local Zoning Can Make—or Break—Data Center Development

Zoning frameworks for data centers vary widely across the U.S.—with some jurisdictions proactively guiding development, while others are just beginning to adapt.

Where Local Zoning Is Working:

Loudoun County, Virginia: Known as “Data Center Alley,” Loudoun has used a dedicated Data Center Overlay District since 2016 to guide projects to areas with strong utility infrastructure. Nearly all new development is concentrated in the overlay, with clear standards for lot size, height limits, setbacks, and utilities. In 2022, Loudoun revised its policy to require public hearings and board-level approval for future builds—signaling a shift in response to concerns about land use saturation and community impact.
New Albany, Ohio: Proactively included data centers in its 2014 Strategic Plan, positioning itself early as a destination for hyperscale development. Since then, the city has seen an influx of major players such as AWS, Microsoft, Vantage, Edged, and QTS. “Shortly thereafter, the area exploded with new hyperscale data center development,” said Peter Bergan, partner at Orrick. “Like other secondary markets seeing rapid growth, New Albany may soon face zoning challenges or resident pushback as large-scale projects encroach on residential areas.” The rapid expansion highlights the upside of forward-thinking policy—but also the need to revisit zoning as development accelerates near residential zones.

Where Zoning Falls Short:

Other communities lack clear guidance for data center development, leading to delays and uncertainty:

Rural Texas and the Midwest: Data centers are often categorized under broad “technology” or “light industrial” designations—labels that fail to account for their unique infrastructure needs. These vague classifications often trigger ad hoc review processes and case-by-case approvals, creating longer timelines and increasing costs. As Alan Hall of LightBox PZR notes, “For communities seeking to attract digital infrastructure investment, this regulatory ambiguity represents a growing liability—and a missed opportunity.”
Peculiar, Missouri: Officials initially amended their zoning code to permit data centers in light industrial zones, only to reverse the decision after community pushback. The absence of precedent and codified standards led to uncertainty, stalling the project.

Where Data Center Zoning Goes Next

As demand surges and land becomes more competitive, zoning is no longer just a bureaucratic hurdle—it’s a strategic advantage. The communities that get this right will win the next wave of digital infrastructure. And for developers, early-stage zoning intelligence will be the difference between breaking ground or going back to the drawing board. As one of the pioneers in this space, LightBox PZR continues to guide clients through these complexities, ensuring that data center projects align with local codes—and local priorities.

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