Data center announcements and property values

A new working paper by Garrison Schlauch and Simon Greenhill last week tries to estimate the property value impact of large data centers, based on a new sample of nearly 350 data center announcements since 2003 (drawn from a dataset of nearly 1000). For each announcement, the authors trace surrounding home prices for 5 years before and after and compare with matched comparison areas, first with the announcement and then with the opening of a new data center.

Consistent with increasing public salience, the authors find that before 2021 data center announcements barely moved prices, with most of the discount concentrating after the center opened. Starting in 2021, discounts became significantly more front-loaded, with the price drop shifting almost entirely to the announcement. Unfortunately, there’s not enough data to conclusively say much about the trend in the total discount over time (the current data doesn’t find much of a change to the sum of the post-announcement and post-opening discounts, but it’s too small a sample and too short a window for a definitive answer), which would be an interesting check on how public opposition translates into home prices. Larger data centers and those in areas with fewer existing data centers, though, do see higher discounts.

The effect is, unsurprisingly, higher for homes closest to the data center – while the authors find a roughly 3% average discount for homes within a 3-mile radius of a large center, it jumps to about 7% for homes within a mile (this is, as the authors point out, net of the capitalized benefits of tax revenues or other community amenities). This relatively tight geographical concentration of property value impacts aligns directionally with the wind farm impacts we discussed earlier this year. Both cases illustrate that we’re still clearly short on targeted compensation mechanisms that align with the geography of impact.