Data Center Expansion Shifts to Small US Cities and Iran
Data center development is expanding into small US communities while Iran privatizes national infrastructure with assistance from Huawei.
Global data center development is diverging into two distinct trends across the United States and Iran. In the US, developers are increasingly targeting small micropolitan communities as power constraints and market saturation limit growth in major cities. While these projects bring significant initial capital, experts warn that the long-term economic benefits may be overstated.
Dominic Williams of McKinsey advises local leaders to prioritize lasting economic value over headline construction figures, noting that permanent job creation is often limited. Similarly, Ruthbea Yesner of IDC cautions small cities against overvaluing the benefits of these projects, while Sean Farney of JLL observes that the gap between small and large cities regarding new development has shrunk as time-to-revenue becomes a primary driver for site selection.
In Iran, the government has moved to privatize national data centers, though many remain under state or parastatal control. Communications Minister Mahmoud Vaezi confirmed that the government granted a request from Huawei to build data centers within the country. This lack of transparency regarding ownership has sparked security concerns, particularly given Iran's history of forced content deletion and online surveillance.
