Bringing Data Centers to Brownfields

By Jason B. Hutt and Daniel J. Pope | Commercial Real Estate Development Magazine - Summer 2026 Issue

A framework is in place for understanding and allocating environmental risk.

The redevelopment of brownfield sites into sites for data centers offers unique advantages as well as environmental challenges. Potential site benefits include grid adjacency, established rights of way, zoning, and access to water and other infrastructure. At the same time, site-specific environmental challenges may impact the scope and timeline for development and permitting for new infrastructure.

While data center developers are focused on the development timeline, access to power and stakeholder support, sellers of a brownfield site are most focused on finding a next owner capable of addressing legacy environmental risks in a manner that reduces the possibility of a “boomerang” liability.

Legacy environmental issues at brownfield sites range from minor to significant. An old warehouse could have tiles and insulation containing asbestos, or a transformer might contain polychlorinated biphenyls. Through historical spills and releases, the soil or groundwater at a brownfield site may contain hazardous substances.

Because the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) makes current and former “owners” and “operators” jointly and severally liable for environmental contamination at a site, these historical impacts can present a significant impediment to redeveloping a brownfield for  productive use.

Developers can evaluate and manage these risks through due diligence, contractual mechanisms and the various brownfield programs aimed at bringing industrial sites back into productive use.

Environmental Due Diligence

At each stage of a diligence effort, developers should ask whether and how the findings affect the viability, cost and timeline of a potential project. Typical diligence tools include database searches, historical aerial photographs, site visits, interviews and a review of existing environmental permits. Helpful questions to ask include:

• How has the historical use of the brownfield site impacted soil and groundwater conditions? Is off-site migration a concern? Do existing conditions pose a risk to neighboring properties that might trigger a more active intervention?
• What concerns do state and local authorities have about legacy liabilities at the site? Are there “buffer” properties that could also be purchased to facilitate redevelopment? Has the site been formally enrolled in any remediation programs?
• Is there legacy infrastructure at the site that may need to be removed, and if so, will it present environmental challenges (e.g., removing asbestos-containing materials from buildings, removing underground piping)? Will the infrastructure be a potential project benefit (e.g., electric transmission lines, tie-ins to neighboring facility processes)?
• Are there legacy permits at the site that present challenges or opportunities? Does an existing permit include closure obligations that require a new owner to conduct investigation and remediation activities?
• Does the seller have existing insurance policies that might mitigate the consequences of discovering unknown contamination during redevelopment?