My land is next to a high-voltage transmission line. Doesn't that mean it has power?

Not by itself. Being near a line is a starting point, not a path to power. Buyers want to know whether the serving utility can deliver the load they need, at the size they need, by the date they need it: is there spare capacity on that line and the nearest substation, what upgrades are required, how long the utility's large-load or interconnection study will take, and who pays. A site a mile from a line with room on it can be worth more than one right beside a line that is full. An early load inquiry to the utility tells you which one you have. See how much power a data center needs.

When does power matter more than the price of the land?

On almost every large data center campus. Land is usually a small part of total project cost compared with the buildings, electrical gear and computing equipment, so a developer will pay more for a site that can be energized years sooner rather than save on land and wait in a utility queue. That is why two parcels of the same size and price can be worth very different amounts: one has a believable path to megawatts and the other does not.

Who pays for utility studies and grid upgrades while a buyer is doing diligence?

It is negotiable, so put it in writing. Buyers commonly pay for their own engineering, utility and load studies during the option or diligence period, and upgrade costs are usually set by the utility's rules and the buyer's agreement with it. As the owner, avoid signing up for study or upgrade costs yourself, ask that you receive copies of the studies and that any utility applications in your property's name can stay with the land if the buyer walks away, and have your attorney review those terms before you sign.

Would a data center buyer ever want an ordinary parcel like mine?

Sometimes, and the reason is rarely the acreage alone. A single data center building can be fairly compact, but large campuses usually need room for several buildings, an on-site substation, setbacks, roads and future phases. Buyers choose a parcel because of what surrounds it: available power, nearby fiber, workable zoning and a cooperative community. A smaller parcel can still matter as an edge site, a substation or road location, or one piece of a larger site assembled with neighbors. See data center land requirements.

How close do power, fiber and water need to be to my property?

There is no fixed distance; it comes down to cost and time. Every mile of new high-voltage line, fiber route or water main adds construction cost, easements and permitting, and buyers price that into their offer or pass on the site. Fiber can usually be extended more easily than high-voltage power, and many newer facilities use cooling systems that need far less water, so power distance usually matters most. See fiber connectivity and water and cooling.

Can a data center use my well water, and who owns the water rights?

It depends on your state's water law. In some states the rights come with the land; in others, large withdrawals need a permit, and changing a farm or household well to industrial use can require approval and can be challenged by neighbors or a groundwater district. Know what rights you hold before you negotiate, and ask whether the buyer plans to use your water at all. Many new facilities rely on closed-loop or air cooling, so water is less often a deal-breaker than power, but buyers will still check it.

What happens if the site can't be rezoned, or neighbors fight the project?

Most data center offers depend on the buyer getting zoning and permits, so a denial usually ends the deal. You keep the land and, depending on your contract, some or all of the option payments. Before you sign, read your local land-use plan, look for any data center rules or moratoriums, and find out how similar projects were received. Make sure the contract says what happens to payments, studies and any rezoning applications if approvals fail, and have your attorney review it.

Should I aim for a quick sale, a premium price, or a share of the upside?

Decide this before you answer the first call. A quick sale to whoever calls first is simplest but usually leaves money on the table. A marketed, competitive process tends to bring a higher price. Larger tracts can be sold in phases. On the right powered site, an owner can also contribute land to a joint venture and share in the value created by development. Passive Investments works all of these: brokerage through eXp Commercial, and on qualifying sites, equity and joint-venture partnerships with Carson’s capital partners. request a site evaluation.

Data Center Site Selection | Passive Investments

How Developers Pick a Data Center Site

How Do Developers Choose a Data Center Site?

Site selection is a process of elimination. Developers and their engineers score candidate parcels against a weighted set of criteria, weeding out anything with a fatal flaw before spending real money on diligence. Power leads; everything else ranks the survivors.

Why Does Power Lead the Data Center Site Selection Funnel?

Power is the only question that can instantly disqualify a parcel: can it be powered at acceptable cost on the needed timeline? Most candidate sites fail that test, and the survivors are then ranked on physical, regulatory and economic factors. That is why two parcels with identical acreage and price can be worlds apart in value.

The screen begins with the only question that can instantly disqualify a parcel: can it be powered, at acceptable cost, on the needed timeline? Most candidate sites fail here. Survivors are then ranked on the physical, regulatory, and economic factors below. This is why two parcels with identical acreage and price can be worlds apart in value — one has a path to megawatts and one does not.

Which Factors Do Data Center Site Selectors Screen?

Site selectors screen power availability and timeline, power cost and utility terms, distance to transmission and substations, acreage, contiguity and topography, zoning and entitlement certainty, fiber connectivity, water availability, environmental and flood condition, tax incentives, labor and construction access, and market fit. Power-related factors are weighed first and most heavily.

Power availability & timeline — serving utility capacity, transmission and substation proximity, interconnection queue position.
Power cost & utility terms — energy rate, demand charges, large-load tariff, who pays for upgrades.
Transmission / substation proximity — distance and voltage of nearby lines, spare capacity.
Acreage, contiguity & topography — large unbroken, flat, buildable tracts.
Zoning & entitlement certainty — industrial or data center zoning, cooperative jurisdiction.
Fiber connectivity — long-haul routes, multiple carriers, diverse paths.
Water — supply and rights for cooling.
Environmental / flood — clean Phase I/II, outside flood risk.
Incentives — sales-tax exemptions, property-tax abatements.
Labor & construction access — trade labor, roads, rail for heavy equipment.
Market fit & exit — demand depth and a credible monetization path.

How Does a Weighted Data Center Site Scorecard Work?

Score each factor from 1 to 10, multiply by its weight and add the results. Power availability and timeline carries 25%, power cost 15% and transmission proximity 10%, so half the score depends on power. A score of 1 or 2 on power availability and timeline usually disqualifies a site regardless of everything else.

Score each factor 1–10, multiply by the weight, and sum. Power-related factors carry the most weight by design.

Factor	Weight
Power availability & timeline	25%
Power cost & utility terms	15%
Transmission / substation proximity	10%
Acreage, contiguity & topography	8%
Zoning & entitlement certainty	8%
Fiber connectivity	8%
Water availability	7%
Environmental / flood condition	6%
Tax incentives	5%
Labor & construction access	4%
Market fit & exit	4%

Kill criterion: any score of 1–2 on "power availability & timeline" usually disqualifies a site regardless of total — a site you cannot power is not a data center site. For the full requirement set behind these factors, see Data Center Land Requirements; for the economics, see Data Center Economics & Underwriting.

What Seven Questions Decide If Your Land Qualifies for a Data Center?

Buyers check seven things in roughly this order: whether the site can get enough power and when, whether the land is physically workable, fiber access, water or a low-water cooling plan, zoning and permits, community support, and whether there is an active buyer pool and clear exit. Answering these before marketing shows exactly where your site stands.

Landowners usually ask one question: does my land qualify for a data center? Buyers answer it by working through the same short list, in roughly this order. If you can answer these before you market the site, you will know where it stands, and you will be able to speak the buyer’s language when an offer arrives.

Question	What buyers check	Red flag
Can the site get enough power, and when?	Utility capacity, nearest substation and line voltage, study queue length, upgrade cost	No credible power path within the buyer's timeline
Is the land physically workable?	Contiguous acreage, flat or gently sloped ground, soils, room for a substation and future phases	Floodway or high flood risk, steep slopes, odd shapes broken up by easements
Can it connect to fiber?	Distance to long-haul routes, number of carriers, two separate paths into the site	Single carrier, no route diversity, long and costly build to reach fiber
Is there water, or a cooling plan that doesn't need much?	Water supply and rights, local drought rules, whether the design uses closed-loop or air cooling	Unclear rights or a water district likely to oppose new industrial use
Can it be zoned and permitted?	Current zoning, the local land-use plan, any data center ordinance, noise and setback rules	A required rezoning in a jurisdiction that has turned down similar projects
Will the community support it?	Local officials' stance, nearby homes, public meetings, tax benefits to the county	Organized opposition, moratoriums, or a recent local fight over a similar project
Is there a buyer and a clear exit?	Demand in the region, which operators and developers are active nearby, the price range for powered land	Few active buyers in the area and no story for who will own the finished campus

A site does not need a perfect answer to all seven. It needs a believable answer to the first one and no fatal flaw in the rest.

Frequently Asked Questions about Data Center Site Selection

What is the most important data center site selection factor?

Power — specifically, whether the site can obtain the required megawatts at an acceptable cost on the needed timeline. Power availability and timeline sit at the top of the funnel and eliminate most candidate parcels before any other factor is weighed.

What makes a site shovel ready?

A shovel-ready site has its entitlements, zoning, environmental clearances, and utility commitments in place so construction can begin with minimal delay. Adding secured electrical capacity makes it shovel-ready powered land — the most valuable raw input in the industry.

How do developers score data center sites?

With a weighted scorecard: each factor is scored 1 to 10 and multiplied by a weight, then summed. Power-related factors carry the most weight by design, reflecting that power is the binding constraint.

Does location matter for data centers?

It depends on the workload. Latency-tolerant AI training campuses can sit far from population centers in power-rich areas; latency-sensitive inference, edge, and interactive workloads need to be closer to users. Location is judged against the intended use, not in the traditional retail sense.

What disqualifies a data center site?

The most common kill factors are no credible near-term power path, location in a FEMA floodway or high-risk flood zone, unbuildable topography, and hostile or impossible zoning. A site that cannot be powered is not a data center site regardless of its other merits.

How do companies decide where to build data centers?

They screen candidate sites against a weighted list of factors and drop any site with a fatal flaw. Power availability and timing comes first, followed by power cost, transmission and substation access, buildable acreage, zoning, fiber, water, environmental and flood risk, incentives, labor and construction access, and demand in the market. The sites that survive are compared with a scorecard like the one above.

Why are Northern Virginia, Ohio, Phoenix and Texas popular data center markets?

Each combines several of the screening factors. Northern Virginia has the densest fiber and the largest existing cluster of data centers, though power constraints have lengthened timelines there. Central Ohio offered available power, land and incentives in a central location. Phoenix brought large tracts, incentives and low natural-disaster risk, with water and heat as the trade-offs. Texas has a large power market and abundant land. Markets shift as power availability changes, which is why newer regions keep emerging.

Does my land qualify for a data center?

Start with power: can the serving utility deliver large amounts of electricity to your site within a few years? If the answer is plausibly yes, work through the rest of the list: workable acreage, fiber, water or a low-water cooling plan, zoning, community support and an active buyer market. The What Seven Questions Decide If Your Land Qualifies for a Data Center? are the same ones buyers ask. Passive Investments provides preliminary site qualifications; request a site evaluation.

Do data center developers lease or buy land?

Most buy, usually through an option or a purchase contract with a long diligence period while they confirm power, zoning and engineering. Ground leases do happen, more often on specific parcels or where an owner will not sell, but owning the land is generally simpler for financing a large campus. Either way, the terms, including option payments, extensions and what happens if the buyer walks, matter as much as the headline price.

How much do data centers pay for land?

It varies widely, and power drives most of the difference. Land with no realistic power path trades closer to local land values, while sites with confirmed power capacity and a clear delivery date can bring much more. The $300,000 to $600,000 per MW range used on this page is illustrative for powered land, not a valuation. See what makes a data center site valuable.

Can I build my own data center and lease it to companies?

It is possible but expensive and specialized. Data centers cost far more per square foot than ordinary industrial buildings, and tenants want proven power, cooling and an experienced operator. Landowners more often capture development value another way: selling a powered, entitled site; building a powered shell for an operator; or contributing land to a joint venture with a developer and capital partners. Carson invests alongside owners in those structures on qualifying sites.

Where do data centers get their power?

Mostly from the electric grid through the local utility, often via a substation built for the campus. Backup generators keep the facility running during outages, and many operators also contract for renewable power through long-term purchase agreements. Some new campuses are adding on-site generation, such as natural gas turbines or fuel cells, to get running sooner while grid capacity is built out.

What is the difference between available and requested power in site selection?

Available power is capacity that is energized or contracted today — documented in a signed service agreement or a utility will-serve letter with a stated megawatt figure and date. Requested power is capacity someone has applied for or is studying in a queue; it is a possibility, not an asset, until the utility commits to it in writing. Site selectors score available power at full weight and treat requested power as a timeline risk.

What utility documents make a site credible to site selectors?

A will-serve letter or service agreement stating megawatts and an in-service date, any load or facilities study, the utility's upgrade cost allocation, and the applicable large-load rate. Rules are tightening: utilities such as TVA added capacity commitment charges for large data center loads in 2026, and on June 18, 2026 FERC ordered six grid operators to justify or reform their large-load interconnection rules.

How long after site selection can a data center be energized?

It depends on what is already built. This guide's working figure is about four years on average for a new large-load grid connection in 2026, versus roughly 12–24 months where an existing substation can serve the load. That spread is why energization date is often weighted as heavily as megawatts.

How much of a parcel counts as buildable for site selection?

Only net buildable acreage — after floodplain, wetlands, easements, slopes and setbacks. Site selectors size the campus at roughly 0.5 to 1.5 acres per MW of IT load on that net figure, and favor contiguous ground with room for future phases.

Why do site selectors think in price per megawatt rather than per acre?

For sites with documented, near-term power, yes — per-megawatt thinking drives their land budget. For sites with only requested power, they price per acre, often through an option that converts to a purchase once power is confirmed.

How do buyers underwrite a site after it passes screening?

They move from scorecard to costs: confirmed megawatts and date, upgrade cost, rate and any capacity charges, build cost per MW, zoning path, fiber and water costs, and exit. The land price is what remains after each item is costed against the target yield.

Have a site to evaluate?

Carson Jones can score your parcel against the criteria that actually drive data center decisions. Get a confidential site read or visit Passive Investments.

Educational information only — not legal, tax, engineering, or investment advice.

Sources

Figures described as working figures are this guide's own estimates; confirm megawatts, dates and costs for a specific site in writing with the serving utility.

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Carson Jones

Founder · Passive Investments · eXp Commercial

Carson Jones is the host of Carson's Corner: Commercial Real Estate, author of The Red Flag Playbook, a licensed commercial real estate advisor and business broker, and the founder of Passive Investments. With 18 years of experience as an entrepreneur and 12 years specializing in passive investing, Carson works with high-net-worth individuals, family offices, business owners, and sophisticated investors as a broker and principal.

Carson holds a BBA in Finance from Baylor University and his Tennessee commercial real estate license (#382989). He actively pursues acquisition and equity opportunities across the United States and abroad through a worldwide network of qualified buyers, family offices, institutional investors, and top-tier developers.

This article is for informational and educational purposes only and should not be considered tax, legal, accounting, or investment advice. Tax laws are complex and change frequently. Always consult your CPA, attorney, and financial advisor before making any financial, tax, or investment decisions. All investments and property ownership carry risk, including the potential loss of principal. Carson Jones, Passive Investments, and the author make no guarantees regarding the tax treatment, performance, or outcome of any specific investment strategy described in this article.

Pricing disclaimer. The $300,000–$600,000 per-MW figures used on this page are an illustrative pricing range, not a guaranteed valuation. Actual pricing depends heavily on confirmed power capacity, delivery timelines, utility costs, location, and development readiness.