The 2026 midterms brought data center development to local ballots. We expect local rules to shape where and how quickly new capacity gets built, not whether it is needed.
Capacity that is already built, powered, and approved can serve customers today, without the development risk or extended timelines of bringing new supply online.
Developers with the relationships, experience, scale, resources, and track record to meet a higher bar for execution and community engagement are best positioned.
We focus on stabilized assets and late-stage build-to-suit projects that have already cleared zoning, permitting, and power milestones.
The 2026 midterm elections brought data center development to local ballots, and the results point to closer scrutiny of new projects.
We believe the outcome reinforces key elements of our investment thesis: demand for computing power continues to grow, while new capacity faces increasing barriers to development. This dynamic may enhance the strategic value of existing capacity and favor developers with the expertise to meet a higher bar for execution and community engagement.
Our digital infrastructure strategies primarily focus on stabilized assets and late-stage build-to-suit projects, where capital deployment is minimal prior to clearing key development milestones, such as zoning, permitting, and securing power.
Cloud adoption continues and AI adds a compute-intensive layer on top. Contracted cloud demand and capital spending plans at the largest technology companies continued to climb in 2026.
Power, permitting, and development complexity limit new supply. Closer local scrutiny adds another step for projects not yet approved.
As building gets harder, experienced developers that pay their full cost of service, engage with communities early, and execute with discipline are best positioned.
On November 3, 2026, data center development appeared on ballots in several states,1 part of a broader conversation about affordability, including power costs, and what new projects mean for local communities. Voters rightly expect more from developers, and we share that expectation.
Communities asked to host new capacity should have a say in where and how it is built. We believe the projects that move forward will be those that pay their full cost of service, especially for power, and engage their communities early.
Bringing new capacity online already took years: securing power, grid connections, zoning approvals, equipment, and skilled labor. Closer local scrutiny adds another hurdle for projects not yet approved, which could slow or delay new supply in the markets affected.
Third-quarter 2026 results from the hyperscalers, the largest cloud and AI companies, underscore the significant and growing need for computing infrastructure. Google Cloud and Microsoft alone report more than $1.2 trillion in contracted revenue not yet delivered, and Alphabet, Amazon, Meta, and Microsoft expect to spend at least $700 billion on capital projects in 2026.2
People served by data centers every day3
Google searches per minute4
Of all data was created within the past 2 years5
Data creation is expected to double again by 20285
With new supply harder to add and demand still growing, the balance of value is changing in two ways:
Capacity that is already built, powered, and approved can serve customers today, without the development risk or extended timelines associated with bringing new supply online. As power, equipment, and approvals become harder to secure, we believe the value of capacity already in place may continue to increase.
Successful projects increasingly depend on:
Relationships with utilities, regulators, communities, suppliers, and tenants
Experience navigating zoning, permitting, and local approvals, hurdles that long predate this election
Scale to spread cost and risk and secure supply from vendors and utilities
Resources to fund long-lead power, equipment, and construction through the cycle
A track record of delivering on time, on budget, and on commitments to host communities
Contracted cloud revenue continues to grow
Google Cloud revenue backlog, $ billions; up 21% in two quarters2
Where we invest: capital follows de-risking
Illustrative risk and capital deployed over a typical seven-year build-to-suit project
Our strategies primarily focus on stabilized assets and late-stage build-to-suit projects, facilities developed for a specific tenant that are typically leased, entitled, and approved before we commit significant capital. Many of the development risks highlighted by the election results arise before a project receives the necessary approvals to proceed. This is also the phase during which we typically deploy the least capital, approximately 0%–5% of projected costs. We deploy more once zoning, permits, and power are secured and long-term leases with investment-grade or other creditworthy2 tenants are signed.
Permitting, power, and approval risks are not new, and our portfolio companies have long managed them. We do not believe the election changes that. Clearer rules for responsible development, which we welcome, should favor developers that engage communities early and earn approval through transparency and relationship building before breaking ground.
Stabilized assets have already cleared those hurdles. If local restrictions slow new supply, we believe capacity that is built, powered, and leased is well positioned as demand keeps growing.
Local ballot measures may make new data centers harder to build in some communities, but they do not diminish the underlying need for capacity. We believe growing demand and increasing barriers to development reinforce the importance of existing capacity, disciplined execution, and responsible capital deployment — three characteristics central to our investment approach.
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Endnotes
1. State Capital Lobbyist, results as of Nov. 5, 2026; unofficial until certified.
2. Company reports, quarters ended Mar. 31–Sept. 30, 2026. Contracted revenue not yet delivered: Google Cloud revenue backlog (~$561B as of Sept. 30, 2026; definition changed in Q1 2026) plus Microsoft commercial remaining performance obligations ($677B). Capital spending: sum of the low end of 2026 guidance for Alphabet, Amazon, Meta, and Microsoft (Microsoft on a calendar-year basis); definitions vary by company. Guidance is subject to change and may not be realized.
3. ITU Facts & Figures, 2025.
4. ITU; Statista, 2025.
5. IDC, “Global DataSphere Forecast, 2026–2030” (Global DataSphere projected to surpass 700 ZB by 2030).
6. Includes employees of STACK Infrastructure, Beale Infrastructure, RadiusDC, Gigabit Fiber, and Kirkwood Infrastructure are Blue Owl Digital Infrastructure’s wholly owned/controlled captive operating companies.
7. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time. Investment grade companies must have “BBB-” rating or higher by S&P or an equivalent rating from a nationally recognized statistical rating organization (NRSRO).
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