What S&P is seeing
Analysts at S&P, including Chris Mooney, spotlighted moratorium actions in New York, Texas, Pennsylvania, Illinois, and Arizona. Across the country, they tallied 146 stalled or canceled developments, and roughly three out of four traced back to local opposition. The buildout wave has also drawn scrutiny in recent months, with local governments in 40 states putting bans in place.
Why projects are getting stuck
S&P points to three recurring bottlenecks: power grid capacity, environmental sustainability issues, and zoning changes. Communities frequently cite higher energy costs, limited water supplies, and concerns about air and noise pollution.
The credit angle
So far, S&P says the effect on credit grades has been limited. Still, "to the extent that moratoriums, permitting slowdowns or potential reversals meaningfully delay projects, financial penalties in the form of rent credits and even tenant termination rights pose credit risk."
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What it means for your portfolio
If you have exposure to companies building or leasing data centers, the takeaway is finely balanced: S&P notes minimal rating impact to date, but also flags that meaningful delays tied to moratoriums or permitting could trigger rent credits or even tenant termination rights, which create credit risk for projects. The bottom line: local pushback and policy moves are now a tangible factor in assessing the timing and credit profile of data center developments.
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