BlackRock CEO Warns US Data Center Construction Pause Could Trigger Recession

BlackRock CEO Warns US Data Center Construction Pause Could Trigger Recession

A nationwide pause in US data center construction could contribute to a recession, according to BlackRock CEO Larry Fink.

In comments to CNBC, Fink said a countrywide moratorium could have serious economic consequences because so much recent economic activity has been tied to major investments in artificial intelligence infrastructure.

Real estate services firm JLL has forecast that meeting data center capacity requirements through 2030 will require approximately $3 trillion in total investment. Demand remains high: global occupancy is 97 percent, while 77 percent of the construction pipeline has already been pre-committed to tenants.

The US market is especially competitive. Demand for data center capacity is now five times higher than it was two years ago, and vacancy rates have remained at one percent for three consecutive years. JLL has reported continued investor confidence, with development accelerating to keep pace with demand.

Growing opposition to data center projects

At the same time, data centers are facing increasing opposition from local communities, government officials, and media organizations across the US. Moratoriums are being considered or implemented in multiple locations. The measures that have been adopted have ranged from a week-long pause to restrictions lasting as long as 18 months.

Even jurisdictions that have traditionally supported data center development are reviewing the local effects of new facilities. Loudoun County, Virginia, a major data center hub, voted last month to block new facility applications.

During his CNBC interview, Fink described much of the opposition as “misinformation” and said data centers are creating “more new jobs than ever before.”

Other obstacles to expansion

Moratoriums are only one potential source of delays for the US data center buildout. Discussions about energy costs and grid upgrades remain ongoing and have become a major part of the national debate.

The industry’s rapid expansion has also contributed to shortages of equipment, raw materials, and labor. These constraints are causing delays in project delivery around the world, adding further uncertainty to the pace of future data center construction.