The 2026 Data Center Development Report by Foley & Lardner LLP highlights a rapidly evolving data center industry driven by the artificial intelligence boom, while warning of mounting strategic challenges as markets tighten. The report, based on insights from 105 U.S.-based professionals with direct experience in data center development, energy procurement, technology delivery, or operations over the past two years, reveals growing concerns about the sustainability of current growth rates. A key finding shows that 63% of respondents anticipate a strategic correction in the data center market by 2030, with nearly 40% believing the current pace of development is unsustainable. Despite these concerns, 95% remain confident that the industry will meet rising compute demand by the end of the decade. Energy availability and redundancy emerged as the top obstacle, cited by 54% of respondents, as the race for reliable, high-capacity power intensifies. Daniel Farris, partner and co-lead of Foley’s Data Center and Digital Infrastructure Team, noted the current “Gold Rush mentality” around securing power, warning that access to sufficient energy at necessary levels will become increasingly difficult over the next two to three years. While only 10% of respondents identified water availability and use restrictions as a current challenge, that number is expected to rise to 25% by 2030, signaling growing environmental and regulatory pressures. The report also underscores the transformative role of AI in driving demand for data centers, but stresses that success hinges on stakeholders’ ability to scale facilities efficiently and secure reliable power. Rachel Conrad, senior counsel and co-lead of Foley’s digital infrastructure practice, emphasized that power providers must either expand capacity or improve efficiency to keep pace. “Those who can deliver innovative solutions to these challenges will be the biggest winners over the next five to ten years,” she said. Additional insights include the growing importance of colocation strategies, persistent financing hurdles, and concerns about the long-term profitability of AI-driven data center projects. The report also reflects input from six qualitative interviews with investors and hyperscaler tenants, which helped shape survey questions and deepen the analysis. Foley’s report serves as a critical roadmap for stakeholders across the data center ecosystem, offering strategic guidance amid rapid technological change and tightening market conditions. As the digital infrastructure underpinning the AI revolution expands, the ability to balance growth, sustainability, and innovation will define the industry’s future.