Every single day, over 400 million terabytes of data are create, and that number is only on the rise. The year-over-year growth in data usage is astronomical. The Wall Street Journal wrote an article titled, “Why the AI Industry’s Thirst for New Data Centers Can’t Be Satisfied,” detailing the desperate need for more data centers in order to keep up with the massive demand. The tremendous rise of data centers is primarily driven by hyperscalers like Microsoft, Meta, Google, and IBM.

The increasing need for digital infrastructure have made data center development a critical part of the modern economy, especially as other construction sectors have waned in recent years. Research from Synergy Research Group & McKinsey forecasts that global spending on data center construction will reach $49 billion by 2023.

However, building and operating a data center involves navigating a complex permitting process to ensure compliance with local, state, and federal regulations. Data centers have several unique qualities that can make permitting complicated. For starters, data centers as a concept are quite new, and much of the building code across the US hasn’t been updated to reflect the unique requirements of data centers. In this guide, we’ll break down what makes permitting data centers so hard, as well as best practices to ensure a smooth approval process.

Zoning & Use

The average data center is 100,000 square feet, with some nearing close to 1 million square feet. It’s a massive industrial structure, but without all the typical hazards and safety needs of industrial projects. Data centers are only just beginning to be mentioned in local zoning ordinances. This means that in many jurisdictions, there is no straightforward way for local reviewers to categorize the use. Data center projects often require rezoning, permitting waivers, and special exemptions.

The location of data centers compounds this problem. As developers search the country for large parcels of land with necessary access to surplus grid power, they have increasingly focused on small, rural jurisdictions where similar infrastructure development is unprecedented. In areas with no existing land-use regulation, developers often have to pursue variances or Planned Development Agreements (PDAs).

Site Considerations

Aside from zoning, data centers also have unique site requirements, primarily due to their intensive power needs, low human traffic, and environmental impact.

Power

Power is the single most critical resource for a data center and often the primary constraint in site selection. Data centers need significant, reliable power to run servers and maintain 24/7 operations. These campuses are considered “mission-critical” infrastructure, so reliability is essential. This demand can strain local resources, especially in regions where the electrical grid is not equipped to support such high levels of consumption. In some cases, developers may need to build additional infrastructure to bridge the "last mile" gap, bringing in extra power capacity from nearby substations or connecting directly to high-voltage lines.

Permitting this infrastructure is frequently challenging, as it involves utility coordination, connection approvals, and sometimes even environmental assessments. Interestingly, a recent trend in the data center industry involves repurposing old bitcoin mining sites, which have substantial power access but have become less profitable in recent years. This trend underscores the parallels between the energy-intensive needs of both industries, however it adapting an existing structure or site can introduce its own permitting complexity to be aware of.

Parking

‍Parking requirements are another common issue during site consideration. Standard zoning codes usually dictate parking minimums based on building square footage. For a facility with hundreds of thousands of square feet, this requirement can translate into dozens or even hundreds of parking spaces—far more than a data center needs. Data centers typically have minimal onsite staff, with only a few employees present during each shift.

Municipalities may resist granting parking waivers, as they often prefer to apply uniform standards to simplify enforcement. However, data centers have an interest in minimizing unnecessary parking for several reasons. Reducing the number of parking spaces can reduce construction costs, which can then be redirected toward the specialized and expensive equipment inside the building. In land-constrained or urban areas, smaller parking lots allow developers to maximize usable space, increasing the capacity of the data center. In rural areas, avoiding unnecessary parking helps preserve more of the natural landscape, contributing to a lighter environmental footprint.

Environmental Impact

‍While often located in rural areas, data centers can have a surprisingly large environmental footprint. The constant hum generated by data centers makes noise a common issue that can affect nearby residents or wildlife, frequently leading to protests and pushback from the population. HVAC systems and backup generators run continuously, with cooling systems creating substantial noise, and backup power generators emitting both sound and pollutants.

Permitting may also involve addressing local environmental regulations concerning trees, natural habitats, and wildlife relocation. Because data centers are large, box-like structures, they can disrupt ecosystems. Developers may need to clear land, remove trees, which may trigger additional reviews or environmental impact assessments. In some cases, permits may require noise-dampening infrastructure, habitat preservation offsets, or other mitigations, all of which are important considerations for data center sites.

Layout & Fixtures

Data centers are built for equipment, not people, so many interior requirements don’t align well with the needs of these facilities. The following considerations frequently arise in permitting:

Bathrooms

‍Most local codes require a certain number of bathrooms based on a building’s size, assuming it will house a large number of employees or customers. For data centers, this can mean more bathroom fixtures than necessary since a typical data center operates with a skeleton crew. Permitting officials may need to be convinced to waive or adjust these requirements, a process that can involve submitting detailed occupancy plans to demonstrate the facility's low human traffic.

HVAC Systems

‍Server equipment generates a significant amount of heat, requiring high-capacity HVAC systems to keep the facility cool and maintain equipment performance. Data centers also need redundant cooling systems to prevent overheating in case of equipment failure, often meaning the buildings need HVAC components with extensive capacity and resiliency. In certain jurisdictions, these specifications may lead to additional permitting, involving separate plumbing, electrical, and mechanical reviews.

Structural Considerations

‍The extensive HVAC systems and other equipment may require additional structural support. For instance, a large HVAC unit may need specialized support or reinforcements to be securely installed. In a tenant improvement or retrofitting scenario, even seemingly minor HVAC modifications might require structural evaluations and full building permits. This process ensures that the heavy equipment doesn’t compromise the building’s integrity, which, although very important for safety, does of course add to the overall permitting complexity.

Fire Protection

‍Data centers house heat-sensitive equipment, making robust fire protection essential. In the event of an equipment malfunction, fire suppression systems must respond quickly to avoid catastrophic damage. However, designing fire protection in a large, open space like a data center poses unique challenges. Facilities must balance the need for fire suppression without inadvertently damaging the electronic equipment, often necessitating specialized fire stops, compartmentalization, and sophisticated suppression technologies. Similarly to the issue of bathrooms mentioned above, the same issue can arise with fire escapes, which are often mandated based on square footage.

Phasing

Due to long lead times on both power and essential components, such as custom cooling systems, data centers are often built in phases. Phasing is especially useful for projects awaiting final utility hookups or supply chain deliveries of bespoke equipment. Developers may need to strategize how to bring a portion of the center online while construction on other parts is still underway in order to start recognizing revenue from part of the center as soon as possible.

Phasing permits, including Temporary Certificates of Occupancy (TCOs), allow operators to start running certain areas before the entire facility is complete. TCOs can be complex, requiring detailed coordination with the Authority Having Jurisdiction (AHJ) to ensure safety and compliance standards are met.

Best Practices

1. Plan Ahead
   ‍Data center developers and project teams should initiate permit research as early as possible, especially if they anticipate lengthy approval timelines or unique requirements (spoiler: they likely will). Understanding local ordinances, zoning constraints, and potential environmental or infrastructure challenges can save considerable time. Another way to plan ahead is to map out permit dependencies so you understand the order of permits and approvals needed, and thus what you can work on in parallel versus what will need to be done sequentially.
2. Engage with Reviewers
   ‍Being proactive about working with city reviewers can help you get ahead of issues you can expect, such as parking. As early as possible, you can begin to engage with the city and educate reviewers on the operations of data centers so you don’t have to spend time explaining things after your permit application has come back with comments.
3. Conduct a Test Fit
   ‍Regulatory requirements for elements like parking, tree clearances, and building setbacks can reduce the usable footprint. Performing a preliminary test fit ensures you have an accurate picture of the site’s buildable area. It also helps developers anticipate interior layout issues, ensuring a functional design maximized for racking, while meeting regulatory demands.
4. Identify Zoning Modifications Early
   ‍Engaging with the city to discuss zoning and overlay modifications early in the project timeline can reduce risk and allow developers to understand any unique permitting challenges they might face. This is particularly important for parking exemptions, environmental considerations, or usage variances.
5. Phasing Strategy
   ‍Phasing is key to managing long-lead items like power supply or custom equipment. By segmenting the build-out, developers can bring racks and systems online incrementally, improving cash flow and meeting client needs even if the entire site is not yet operational.
6. Stay Organized
   ‍Data center projects often have large project teams across the developer, MEPs, architects, and consultants, so keeping teams on the same page is crucial way to avoid miscommunications and delays. Often times, these project teams and designers aren’t local to the jurisdiction where they are building, which can add a layer of difficulty and disorganization. Utilizing permitting platforms like Pulley helps ensure that every aspect of permitting and every team member is centralized.

Navigating the permitting process for data centers is complex, but by understanding the unique challenges and planning strategically, developers can avoid many common pitfalls and get their racks online as soon as possible.

Pulley addresses many of the challenges of permitting data centers by:

• Identifying every local requirement (even when your team isn’t local)
• Completing forms, uploading drawings, and submitting applications
• Monitoring reviews and responses in real time
• Responding to city comments
• and managing active permits, expirations, and compliance

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Interested in learning more? Request a demo of Pulley here.

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