Foley Report Reveals Growth in Data Center Industry Faces New Strategic Challenges as Markets Tighten

Survey findings provide valuable insights for developing critical infrastructure to power our digital future

Foley & Lardner LLP released today its 2026 Data Center Development Report looking at the artificial intelligence (AI) boom that is propping up much of the U.S. economy and the sustainability of data center development fueling it, including critical challenges and opportunities to come. The report breaks out specific findings by stakeholder groups — including financiers and investors, developers, providers, operators, and tenants and hyperscalers — and delves into important data center development issues, from supply chain breakdowns and colocation strategies to financing snags, concerns about AI’s potential profitability, and more.

The report reflects insights from U.S. experts and executives and shows that the industry is bracing for change with 63% of respondents anticipating a strategic correction in the data center market by 2030 and nearly 40% of respondents saying the current pace of data center development is unsustainable.

“There is a Gold Rush mentality right now around securing power. That’s a big part of why people feel there’s a bubble,” said Daniel Farris, partner and co-lead of Foley’s Data Center and Digital Infrastructure Team. “There’s going to a period in the next two to three years where power at necessary levels is going to be really hard to come by.”

Survey findings reveal that despite the anticipated market correction, 95% of respondents believe the industry will meet rising compute demand by the end of the decade. However, this collective confidence is currently being tested as the race for available power to support these facilities heats up.

Over half (54%) of respondents said energy availability and redundancy is the greatest obstacle to successful data center development between now and 2030, however, different stakeholders cite other top obstacles:

• Permitting issues for developers (53%)
• Supply chain issues for providers (65%)
• Construction costs for operators (50%)

Only 10% of respondents said water availability and use restrictions are an obstacle today, but that number grows to 25% through 2030.

Other key findings in the report include:

• Nearly half (48%) of respondents cite regulatory and permitting as the stage of the development process where deals most commonly break down or stall due to lack of stakeholder collaboration.
• Advances in energy efficiency (48%) and cooling technology (37%) were named as the two greatest opportunities for data center development between now and 2030.
• Respondents see the ideal energy mix needed to meet the demands of data centers as dominated by renewables and battery storage (55%) and complemented by natural gas (17%), nuclear (16%), and other low-carbon sources (9%) like geothermal power or blue hydrogen.

The AI boom presents significant opportunities for the data center industry, but success depends on stakeholders being able to efficiently scale and power new facilities.

“Over the next five to 10 years, power providers will need to either grow capacity or increase efficiency to meet the demand fueled by data centers,” said Rachel Conrad, senior counsel and co-lead of Foley’s Data Center and Digital Infrastructure Team. “Those who are able to come up with the most innovative solutions to overcome efficiency and capacity challenges will be the biggest winners.”

Get the full 2026 Data Center Development Report.

Survey Demographics and Methodology

Foley conducted an online quantitative survey targeting developers, providers, and operators in the data center ecosystem, and qualified 105 U.S.-based respondents who had direct experience in data center development, energy procurement, technology delivery, or operations within the past 24 months. Respondents represented a diverse mix of stakeholder groups, industries, company sizes, and geographies. The survey was fielded in October 2025.

In addition to the quantitative survey, six qualitative interviews were conducted in two phases to obtain the perspective of the investor/financier and tenant/hyperscaler stakeholder groups. Interviews completed prior to the survey were used to develop survey questions and support analysis. The second phase of interviews, conducted in the fourth quarter of 2025, provided additional context to the survey results.

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