Data Centre Developers Still See Opportunity in California Despite Texas Dominance
Bisnow · 10 July 2026
TL;DR
Texas has overtaken California as the leading data centre market in the western United States, offering faster power access, lower taxes, fewer regulations, and less community opposition. Yet California is not being written off. The state had nearly 825 megawatts of data centre capacity under construction at the start of 2026, almost all of it preleased at above-market rents. Industry leaders at a recent Bisnow conference acknowledged California's significant hurdles — lengthy grid interconnection queues, strict regulations, and local opposition — but pointed to offsetting advantages: a strong tech and sustainability ecosystem, union labour as a political ally, and a track record of expanding capacity without driving up emissions. Developers willing to invest in specialist teams and longer timelines can still find viable opportunities in the state.
Our take
This story is primarily relevant to South African property professionals tracking global digital infrastructure trends, particularly those involved in data centre development or commercial real estate investment. South Africa faces its own version of the California dilemma: Eskom grid constraints, lengthy municipal approvals, and community opposition are slowing data centre rollout in Johannesburg, Cape Town, and increasingly Gqeberha. The California experience offers a useful playbook. Developers there are leveraging union labour as community advocates, commissioning specialist regulatory teams, and leaning into sustainability credentials to neutralise opposition — tactics directly applicable to the SA context where load-shedding concerns and environmental scrutiny are intensifying. The near-100% prelease rates at premium rents in California also signal that tenants will pay a significant premium for capacity in constrained but strategically important markets. For SA landlords and commercial developers eyeing data centre conversions or greenfield builds, the lesson is clear: regulatory complexity raises costs but also raises barriers to entry, which ultimately supports stronger rental yields for those who navigate it successfully. Patience and specialist expertise are the real competitive advantages.