Could a developer build a hyperscale data center in Raleigh? Technically, yes.
AI-generated summary reviewed by our newsroom.
- Raleigh currently has no hyperscale data centers nor any requests for them.
- Hyperscale centers generally need 100 or more acres and industrial zoning.
- Developers must buy, rezone, or annex industrial land and obtain a special use permit.
Unlike other towns and cities in the Triangle, Raleigh hasn’t put any kind of moratorium on new data centers — yet.
With current zoning regulations, it’s theoretically possible a developer could try to build a large data center inside the city limits.
However, there are several challenges a developer would run into, including land values and the city’s approval process.
What is a hyperscale data center?
Raleigh already has smaller data centers. Commonly, they’re used as server rooms for things like hospitals or banks.
“They’ve been around for a long time, but the water use on those data centers is less than 25,000 gallons per day in all situations,” Director of Raleigh Water Whit Wheeler told the City Council on Tuesday.
The city doesn’t have any hyperscale data centers, which have much larger footprints and use significantly more water and electricity, said Mark Wittenburg, the chief of the city’s IT department.
The demand for the larger data centers is being driven in large part by the increased computing needs of artificial intelligence.
What would a developer have to do to build a hyperscale data center in the city?
First, a developer would need a lot of land.
When Maryland developer Natelli Holdings put forward its now-withdrawn plan for a data center campus in Apex, it was on 189 acres near Duke Energy’s Shearon Harris Nuclear Plant.
A Raleigh city staff presentation indicates that hyperscale data centers are likely to need 100 or more acres. And that land would need one of two zoning designations: heavy industrial or mixed-use industrial.
A developer would essentially need to do one of three things to get that land:
- Acquire land in the city that’s already zoned for industrial use
- Acquire land in the city and get it rezoned for industrial use. This would require City Council approval
- Acquire land in unincorporated Wake County and have it annexed into the city and rezoned. This would also require council approval
“It’s my professional opinion — and it’s just [through] 31 years of being an urban planner — that the land values in Raleigh are too high for hyperscale centers to make economic sense,” said Raleigh Planning and Development Director Pat Young.
Even if developers did acquire industrially zoned land, they would still need to get a special-use permit approved by the city, Young said.
A special-use permit can only be granted by the city’s Board of Adjustment, whose members are appointed by the City Council.
When weighing a permit, they would enter what’s called a “quasi-judicial” proceeding — similar to a court of law — with fact finding and opportunities to present evidence. The board would also evaluate the impacts of a data center on the site.
“And if there are negative impacts that are not able to be mitigated, the board must deny the application,” Young explained. “If they are able to be mitigated and meet the findings that go with the use permit, then it must be approved.”
Why would a developer want to build a data center in Raleigh?
The main advantage of building a data center in Raleigh or any of Wake County’s other municipalities is access to water. Unincorporated land in Wake County doesn’t have its own water source.
Wake County doesn’t prevent data center construction in its unincorporated land at the moment, but if developers managed to find a piece of land in the county they would likely need to buy water from a municipality.
Could the City Council put a moratorium on data centers?
Every “zone” in a local government’s zoning regulations comes with a list of appropriate uses. But local governments can’t always predict every possible use of a piece of land.
Technically speaking, neither Wake County nor Raleigh has a precise definition for hyperscale data centers in its zoning codes.
In North Carolina, Young said, local governments are required to find the most similar use in their zoning code to a proposed use.
“Optimally, we would want to develop some very clear standards that are directly targeted at AI data centers and bring those to you through a text amendment process,” Young told the council.
Moratoriums, like those passed in Apex and Durham, are typically put in place to give local governments time to do that.
Raleigh City Council Member Jane Harrison said Tuesday that she’s open to a conversation on the city adopting a moratorium.
City Attorney Karen McDonald advised the council to discuss any potential moratorium in a closed session.
But Young said he thinks that the city’s water-use standards, currently being worked on, and existing zoning regulations, protect the public interest already.
