alt Hacker NewsMy employer went through a similar process, not for a data center but for a large recycling yard/center. We had to buy the land first, and it was basically unproductive for 2.5 years of mostly waiting for permits, and it was already zoned industrial so no zoning changes were needed.
The whole project was several million in expenses before even making a dollar. We aren't huge either, the permitting was not supposed to take that long it but a real strain on the business.
So yeah, you're correct. The current process favors large firms, at least those large enough to absorb the cost for multiple years or however long permitting takes, which in some municipalities can be a very, very long time.
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Fun fact: Large businesses are often tapped to write the laws intended to target large businesses. The process is called “model legislation.” Fox and henhouse.
It’s unusual to buy the land and take a gamble on its utility, at least whenever datacenter construction is involved. Purchasing parties are risk averse to this exact scenario and work hard to craft contracts that reduce risk.
Often the choices are —
1. Buy land at $/acre that reflects very little premium, based on a short feasibility study, but without any ultimate contingency that permitting will occur. This is your example. But problematically all permitting applications are typically public record, so when you fail, the land can’t be sold on to someone else as if that didn’t happen, any sophisticated buyer will know the exact issues the city/county had with your usage. Land often transacts onward at firesale prices under these circumstances.
2. $/acre for land is bid upon at a substantial premium reflecting the future value as a datacenter, it remains under contract for potentially years pending outcome of approvals, then it transacts. Permitting being denied usually results in either no money changing hands or a small termination fee reflecting the carrying cost of the land during that period. If permitting works out the seller of land walks away very happy as the $/acre was extremely lucrative.