Proximity and Policy: The Spatial Attractiveness of Data Centers Across Five U.S. Markets

The rapid expansion of data centers across the United States has intensified concerns about where these facilities are built, their environmental impacts, and who bears the resulting costs. This study examines what spatial characteristics make a host site attractive for development, using a two-dimensional framework of proximity and policy. The analysis draws on a purposive sample of five markets: California, Arizona, Texas, Tennessee, and Virginia. Each was selected for hosting large numbers of data centers or for rapid growth in the data center market. The study employs a document-based comparative design, treating a characteristic as common when documented in at least three of the five markets. Findings indicate that proximity determinants are decisive preconditions for development: reliable and inexpensive power, transmission-ready land, and network connectivity reinforced by agglomeration. Water operates as a conditional factor, binding only in arid markets. Policy determinants such as tax incentives and utility ratemaking are common but non-essential, as evidenced by California’s prominence without a dedicated incentive. Interpreted through the spatial echo, the analysis posits that the characteristics that attract data centers become the channels through which costs reach the host community: rising utility rates attributed in the literature to rate design, water strain in arid regions, and incentives that erode the tax base. Synthesizing a fragmented and fast-moving evidence base, the study lays the groundwork for future research on the environmental and human impacts of data centers. Proximity determines where the burden is created, and policy determines who is left to carry it.