New York Governor Kathy Hockle has signed an executive order banning the construction of data centers in the state for 1 year, CBS News reported.
New York will be the first state to do so. Under the order, state lawmakers will not be able to issue environmental permits for the construction of data centers. Hockle believes that this pause will be used to develop legislation to protect citizens and the environment. “Data centers pose a risk of increasing utility costs and depleting natural resources,” Hockle said, according to CBS News.
The ban will be lifted once new standards for building such facilities are approved.
The main reason for such a decision is the concern that the rapid construction of infrastructure for artificial intelligence and cloud services will sharply increase electricity consumption. According to Gov. Kathy Hockle, the additional costs of new power lines, substations and generating capacity should not be automatically passed on to households and other businesses through higher electricity bills.
The second reason is the impact on the environment. Large data centers use significant amounts of electricity, and some cooling technologies also require large amounts of water. Depending on the source of electricity, they can also increase indirect carbon emissions. The state wants to establish uniform standards for assessing electricity and water consumption, backup generators, noise, emissions, and the impact on local infrastructure.
The third motive is related to the benefits to local communities. Data centers require huge capital investments and many construction workers, but once they are operational, they typically provide fewer permanent jobs than industrial plants of similar value. The administration is preparing requirements that investors participate in financing the electrical infrastructure, use local labor, and demonstrate clearer economic benefits for the areas where they build.
During the break, the state must prepare a comprehensive environmental assessment and new regulations. The elimination of some sales tax exemptions that data center operators have previously been able to benefit from is also under discussion. The bill previously passed by the New York legislature had a broader moratorium on projects larger than 20 megawatts, but the governor’s executive order uses a higher threshold of 50 megawatts.
How it will affect the real estate market
1. Land earmarked for hyperscale centers could temporarily lose some of its premium.
Plots near substations, high-voltage lines and fiber optic networks tend to be valued higher when they can quickly get enough electrical power. With new permits blocked, some deals are likely to be delayed, and landowners without an advanced project will have a weaker negotiating position.
The most affected will be large industrial sites in the northern and western parts of the state, where there is space for multi-building campuses. One of the most discussed projects is a proposed investment of approximately $19.4 billion in Genesee County.
2. Completed and already permitted data centers may become more expensive.
Limiting future supply increases the strategic value of existing facilities and projects that already have the necessary permits and contracted capacity. In the North American market, available capacity is already extremely limited: CBRE reports an average vacancy rate of just 1.4% in major markets at the end of 2025, and JLL - about 1%.
With such low availability, a one-year pause could keep technical space rents and existing asset prices high. CBRE also points out that much of the capacity under construction is being pre-leased before buildings are completed.
3. Some of the investment will likely be redirected to neighboring states.
Developers may prefer Pennsylvania, New Jersey, Ohio or other markets where permits and access to electricity are more predictable. This would reduce the short-term demand for large industrial sites in New York and increase interest in similar properties out of state.
New York has not previously been the leading US market for hyperscale centers due to expensive electricity, limited supply of suitable land and complex procedures. However, the market around New York remains important for smaller centers that serve the financial sector and clients requiring low latency and proximity to Manhattan.
4. The impact on the housing and office markets is likely to be limited.
The moratorium does not directly affect residential construction, offices or retail space. Therefore, no significant movement in housing prices in New York City can be expected due to this measure alone.
A local effect is possible around specific planned campuses. If a project is stopped, nearby homeowners can avoid risks such as construction traffic, noise and pressure on water and electricity infrastructure. At the same time, the area may lose expected construction contracts, tax revenues and demand for housing from temporary workers.
5. Industrial properties with secured electrical power will further differentiate themselves from ordinary warehouses.
For data centers, available power is now more important than the area itself. Cushman & Wakefield and CBRE identify access to electricity as the main constraint to the development of the sector. After the moratorium, a property with a real secured connection to the grid may retain or increase its value, while a plot of land advertised only as a potential site for a data center will be evaluated much more cautiously.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be seen at imot.bg