Why mall-sized data centers are popping up across Georgia

Our online lives may seem ethereal and detached from the real world, but not to Jon Tibbitts. He sees the brain and body of the internet every day in downtown Atlanta.

Computer servers and electricity converters buzz like neurons. Cooling fans breathe as if they were lungs. Hundreds of miles of cables act as a sprawling digital nervous system.

It all takes place within a century-old building off Marietta Street that Tibbitts oversees for his employer, Digital Realty. It’s one of the most interconnected data centers of its kind in the country and acts as the beating heart of Atlanta’s digital ecosystem.

“Look up there,” said Tibbitts, the operations manager at the facility called 56 Marietta. Pointing to a cluster of cables more than a foot in diameter, he exclaimed, “That’s what makes this place special.”

ExploreAtlanta’s data center market isn’t just growing fast. It’s unprecedented

The dense network of fiber-optic cables that twist throughout the 10-story structure transmits data through tiny beams of light, allowing near-immediate digital passage for everything from financial transactions to streamed movies to instructions for self-driving cars.

Credit: Zachary Hansen

Credit: Zachary Hansen

The web of digital infrastructure inside 56 Marietta is the largest of its kind in the Southeast and is a critical factor to why data centers are flocking to the Atlanta region at an unprecedented pace. As tech giants look to invest hundreds of billions, if not trillions, into the artificial intelligence revolution, data centers’ influence on Georgians’ lives could soon shift into overdrive.

Metro Atlanta has been the country’s hottest data center market since 2023, according to real estate services firm CBRE. The region rose from the sixth-largest American data center hub to the second, trailing only Northern Virginia, the top U.S. and global market.

Metro Atlanta is witnessing a digital gold rush by tech giants, real estate speculators and private equity firms. The Atlanta market has roughly doubled the amount of data center space under construction every six months since mid-2023, according to CBRE.

Georgia has what the industry wants — ample land, fiber optic infrastructure, power and water. Lucrative state and local incentives have been a sweetener, providing hundreds of millions of dollars in tax savings to attract developers.

The surge has also sparked intense opposition in many communities in Georgia and elsewhere fearful of noise, environmental impacts and huge demands by these hulking computer hubs for power and water. Atlanta has banned them across much of the city.

Others fear the centers will foist costs onto neighbors for electrical infrastructure or for huge incentive packages offered to woo the centers to Georgia.

“This is such a gold mine with Wall Street right now,” said Diana Dietz, who lives near one of the Southeast’s largest data centers under construction in Fayette County. “Everybody is trying to get a piece of the action, and that really worries me.”

Credit: Miguel Martinez-Jimenez

‘Data leads this century’

As AI and cloud storage needs grow, so do the size and electricity demands of data centers, which are required to run 24/7 to keep computer servers online and from overheating. New projects often have more floor space than shopping malls, spanning hundreds of acres and each can require as much power as a city.

“If you go back to 2006, I don’t think anyone understood what the size of this industry was going to be,” said Kerry Person, vice president of data center planning and delivery at Amazon Web Services. “Demand for data center capacity has gone up substantially as we learn more about the potential for AI.”

Credit: Pete Corson

The pipeline of new projects is only growing more robust, according to an analysis by The Atlanta Journal-Constitution. Most new data centers begin with an infrastructure review called a Development of Regional Impact analysis, a required step in Georgia for large projects. Six applications for data centers were made across the 11-county metro Atlanta area from 2020 to 2022. Since then, 44 DRI applications for data centers have been submitted, including 16 in the first five months of this year.

Many county and city leaders like the projects because of lucrative property tax revenues, even after offering tax breaks to woo them.

“Our area has never seen an opportunity like this data center,” Niki Vanderslice, head of the Fayette County Development Authority, said two years ago as data center developer QTS prepared to start building a sprawling facility. She said it will become the county’s largest taxpayer within a decade, exceeding $40 million in new annual revenue, money she said would reduce the tax burden on residents.

The torrent of data centers, which is unlike anything state leaders or regional planners have seen before, places Atlanta on the vanguard of the next technological revolution.

“Oil led the last century,” Chris Clark, president and CEO of the Georgia Chamber of Commerce, said. “Data leads this century.”

As their size, utility demands, taxpayer-backed incentives and prominence balloon, concern is mounting that the sector is being allowed to grow without guardrails.

ExploreStates are rolling out red carpets for data centers. But some lawmakers are pushing back

“I know that we need them and they’re moving at light speed with technology,” said Chris Alasa, a resident in Atlanta’s Howell Station neighborhood that’s next to the city’s largest data center campus. “But I’m not sure that our laws and our representation have caught up to that yet.”

Credit: Daniel Varnado/For the Atlanta Journal-Constitution

Multiple proposals across metro Atlanta have faced petitions, protests and packed council meetings as residents fear a project will alter their quality of life.

Those concerns, which range from pollution to electricity costs to site location, have led some communities to temporarily ban new data centers or bar them from certain locations.

It’s also become a hot topic under the Gold Dome. Legislation to pause a lucrative sales tax exemption for data center equipment was vetoed by Gov. Brian Kemp last year. Subsequent legislation targeting electricity infrastructure costs brought on by the influx stalled amid intense industry lobbying.

Georgia Power, the state’s largest electric utility, is planning a historic expansion of its generation fleet, with almost all of the new electrons going to feed the data center beast.

But critics of the utility have questioned whether all of the massive infrastructure build out the utility is planning is necessary. Others are concerned residential customers — who’ve already faced six rate increases since the start of 2023 — could end up facing higher bills because of the new power plants and transmission hardware data centers require.

Georgia Power and the Georgia Public Service Commission have taken some steps to ensure data centers pay their fair share, which they say will keep other customers from being saddled with their costs. Still, it’s a topic that hangs over upcoming elections for two seats on the PSC, which regulates Georgia Power.

Credit: Miguel Martinez-Jimenez

Data center executives say their multibillion-dollar investments place Atlanta at the center of the digital revolution and generate new tax revenues for local governments, even if some of those benefits are offset by incentive programs used to recruit them.

The statewide incentive is projected to waive roughly $296 million in sales tax revenue this year, while local governments have also approved hundreds of millions of dollars in property tax savings to woo data centers.

Pete Marin, CEO of Buckhead-based data center developer T5, said electricity expansion, incentive preservation and local acceptance are critical to the industry growing in Georgia.

“This group of companies, it’s like a swarm of bees,” he said. “They’ll go and find the next best state, and the demand will go there. And it’s hard to shift it back.”

Laying the groundwork

To understand why Atlanta has become such an attractive spot for data centers, it’s critical to turn back the clock to a time before the city got its name.

Atlanta in the early 1800s was called Terminus because it was the end of the Western & Atlantic railroad line. When the city was burned to the ground during the Civil War, the rail network persevered and fueled Atlanta’s rise from the ashes.

Atlanta would grow into a logistics hub — not only with rail but the interstate system and eventually the world’s busiest airport.

Pipes and cables, including fiber lines, the backbones of digital communications, were easy to run along the sprawling network of tracks and asphalt.

Atlanta’s digital infrastructure also got a boost from the 1996 Centennial Olympic Games when international media outlets needed fiber for broadcasts, according to Nick Steen, an associate with real estate services firm Avison Young.

Buildings like 56 Marietta, which are called “carrier hotels,” were established in downtown Atlanta to manage fiber connectivity more efficiently. They effectively were the progenitors to today’s data centers.

“You’d be surprised who all have connections here,” Tibbitts said of 56 Marietta and Digital Realty’s sister carrier hotel at 250 Williams St. “It’s everyone you can think of, and their data all runs through this building.”

The fiber network also helped Atlanta emerge as a global payments processing hub.

Credit: Courtesy of Digital Realty

Atlanta’s relative proximity to the coast is another factor. More than 95% of global internet traffic is carried through undersea cables, a boon to markets near the coast.

Three of the newest undersea cables on the East Coast connect to DC Blox’s cable landing station in Myrtle Beach, South Carolina. Atlanta was the first inland American market directly connected to the cable landing station through a 450-mile fiber route.

Credit: Courtesy of DC Blox

Chris Gatch, chief revenue officer at Dunwoody-based DC Blox, said the station “has enough transmission capacity to transmit the entire Netflix catalog in under a second.”

“Infrastructure creates gravity,” he said.

It was common only a few decades ago for every office building, school and city hall to have a few closets dedicated to computer storage.

Data centers, with their economies of scale, are far more efficient and secure.

Credit: Courtesy Microsoft

But stand-alone data centers need ample fiber connections to plug into the country.

The two largest internet exchange points were established in Washington, D.C., and Santa Clara, California, markets that have developed over decades.

In late 2022, after OpenAI’s flagship platform ChatGPT became public, demand skyrocketed to build more data center space.

Northern Virginia near D.C. found itself constrained for available electricity and land, leading developers to look elsewhere. Steen said Atlanta, the Southeastern fiber hub, “ended up being the next logical choice.”

Mike Lash, senior vice president of CBRE’s data center solution team in Atlanta, described America’s data center market as a Champagne pyramid at a wedding. Northern Virginia has long been at the apex with Atlanta and other major cities filling out the second tier.

Once the glass at the top is full, demand spills into the next highest tier and continues to trickle down the tower. Nothing has brought more Champagne to the party than AI.

“Now that the Champagne is flowing,” Lash said, “there’s no way to turn it off.”

Growing pains

Brian and Stephanie Beck two decades ago found their dream home down a winding driveway in a forest off Wagers Mill Road in Coweta County. Their days among untouched timber could soon be over.

“I’m smart enough to know that it’s not going to stay empty property forever,” Brian Beck said. “But I think it can be managed a lot better that coming in, clear-cutting 800 acres and covering it with concrete.”

Credit: Miguel Martinez-Jimenez

A $17 billion data center proposal called Project Sail has spurred Beck and his neighbors to action.

Located 45 miles southwest of Atlanta, the 831-acre project site is under contract with industrial titan Prologis. The project, which is estimated to require 900 megawatts of power, is among several in rural Georgia that’s ruffling feathers.

Laura Beth and Phil Sofolo, who live a mile away from the Becks, are bracing for a security fence and buzzing building to border their backyard.

“I think all areas in Georgia would benefit from a data center and the tax revenue they bring it,” Beth said. “But our concern is where they’re located, and this is not where a data center should be.”

Credit: Miguel Martinez-Jimenez

Prologis leaders said the site’s proximity to a Georgia Power plant makes it an ideal spot for an energy-hungry facility. Kent Mason, marketing officer for Prologis in Atlanta, said the location eliminates the need for hulking new transmission lines, which are bothering other communities near data centers.

“What we like, as a company with a conscience, is that there’s already this massive Georgia Power generating station and the lines are there,” Mason said. “The interstate for us to connect to is there already, so it’s less impactful.”

Clark, the Georgia Chamber leader, said any fast-growing industry will spark growing pains, but he warned against an overcorrection.

Credit: Daniel Varnado/For the Atlanta Journal-Constitution

Some local governments, including Coweta County, have implemented moratoriums to evaluate their zoning codes. Atlanta bars data centers along the Beltline, near MARTA stations and in select neighborhoods.

But as long as AI surges and Georgia has ample power, land and regulations friendly to data centers, the sector remains poised to grow.

— Staff writer Drew Kann contributed to this story.

About this series

This is the first part of a series on the rise of data centers in Georgia. To learn more about Georgia’s fast-growing data center industry, the AJC conducted more than 65 interviews and visited Northern Virginia to see the world’s largest data center market in action. Those interviews encompassed data center developers and operators, utility providers, market analysts, elected officials, government watchdogs and community activists.

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