Innovative technologies, shifting consumer behavior, and a post-pandemic reimagining of space have rapidly transformed commercial real estate (CRE) over the last decade. However, one foundational element of CRE — and increasingly, of the automotive sector — is reaching a breaking point: infrastructure capacity, especially for power and water. These constraints are quickly becoming decisive factors in site selection, factory development, and operational continuity for automotive OEMs and their suppliers.

Data Centers Are Dominating Capacity

The explosion of AI, cloud services, and edge computing has triggered a massive wave of data center development across the U.S., particularly in major metros like Northern Virginia, Dallas-Fort Worth, Phoenix, and Atlanta. These facilities are extraordinarily resource-intensive, placing unprecedented demands on both energy and water infrastructure.

While this may seem distant from the assembly line, it’s directly impacting automotive site planning and production timelines. Data centers are increasingly outcompeting traditional industrial users — including automotive manufacturers and their Tier 1–3 suppliers — for grid access. Local utilities are often prioritizing hyperscale tech tenants who can underwrite substations and sign long-term contracts, leaving industrial users at the back of the line.

The U.S. Department of Energy reports hyperscale connection requests ranging from 300 to 1,000 megawatts, pushing local power grids beyond their limits. Meanwhile, power consumption from AI is doubling annually and could exceed 80 terawatt-hours (TWh) by 2025 — comparable to the electricity needs of entire countries like Switzerland or Austria (source: Artificial intelligence: Supply chain constraints and energy implications).

Contrast this with the automotive industry’s aggressive ESG targets: Ford, for instance, reported a 2.6% reduction in worldwide manufacturing facility energy consumption in 2023, totaling 5.17 million megawatt hours (source: 2024 Ford Integrated Sustainability and Financial Report). However, the issue is less about how much energy manufacturers use and more about whether that energy is even available to new or expanding plants.

Power Delays Are Stalling Auto and CRE Projects

It’s now common for projects — including automotive plants and supplier facilities — to face 12-to-24-month delays just to secure adequate electrical service. Even shovel-ready sites in places like Silicon Valley or Loudoun County, VA, are being sidelined due to grid congestion.

For the automotive sector, these delays ripple through supply chains, stall product rollouts, and complicate EV transition plans. OEMs investing in battery manufacturing, charging infrastructure, and smart factories are finding that grid capacity is the new bottleneck, not land, talent, or capital.

Some jurisdictions have even enacted moratoriums on data center development, in part to preserve capacity for more diversified industrial uses, including advanced manufacturing. Still, without long-term utility planning, these measures are Band-Aids.

Water: The Other Silent Constraint

While power gets the headlines, water is the next big constraint, especially in arid regions where both automotive and data center users are concentrating operations.

Data centers use enormous quantities of water for evaporative cooling. A single 1 MW facility can consume more than 6.75 million gallons annually. Automotive manufacturing, particularly in painting, cooling, and metal finishing, can easily exceed 1 million gallons per day per facility.

This creates direct competition between tech and auto for water access in already drought-stressed areas like Phoenix, Las Vegas, and Southern California. Water usage is now becoming a gating issue during entitlements, and municipalities are scrutinizing each new development’s draw.

While many manufacturers are investing in closed-loop and reclaimed water systems, the rise of AI and constant data processing are pushing consumption higher across the board. In short, EV plants and cloud servers are now fighting for the same finite resources.

What This Means for Automotive and CRE Stakeholders

For developers, site selectors, and corporate real estate leaders in the automotive industry, these challenges redefine what makes a site viable:

• Utility access and delivery timelines are now mission-critical, not afterthoughts. Zoning and entitlements are irrelevant without megawatt-scale power.
• Regions with redundant grid infrastructure, renewable capacity, or microgrid potential will become key competitive hubs.
• Water access and sustainability strategy must be embedded in early-stage planning and design, especially for processes like paint shops and cooling systems.
• OEMs and suppliers must engage utility providers early, sometimes years before breaking ground.
• Joint lobbying and coordination between CRE and manufacturing sectors may be necessary to prevent tech monopolization of infrastructure.

The Bigger Picture: An Infrastructure Reckoning

This isn’t just a commercial real estate problem — or just an automotive one. It’s a national economic challenge. Our ability to scale advanced manufacturing, accelerate electrification, and build smart facilities depends on infrastructure that hasn’t been meaningfully upgraded in decades.

The irony? The digital revolution that powers autonomous vehicles, smart factories, and AI-driven logistics is now competing with physical production for energy and water. Without coordinated infrastructure investment, industries central to America’s economic competitiveness, like automotive, may find themselves locked out of growth markets not by cost, but by capacity.

Real estate site strategy is evolving. It’s no longer just about access to highways or labor: it’s about access to electrons and water.