Data Center Troubles Stoke Industry’s Fear of Coming Distress

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessData Center Troubles Stoke Industry's Fear of Coming DistressAnxiety is growing among data-center operators that the projects could founder as local backlash builds across the US, according to a survey from AlixPartners.Author of the article:Reshmi Basu and Owen McCarthy You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Anxiety is growing among data-center operators that the projects could founder as local backlash builds across the US, according to a survey from AlixPartners.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountProject delays, labor shortages and tightening capital markets, all while community resistance to tech center developments is gathering force, are leading to the increasingly grim view of senior executives in the data center industry. In a poll of more than 400 respondents, 68% said they expected distressed situations to increase over the next 12 to 18 months, up from 66% in 2025, according to the global consulting firm. The preliminary report also blamed a lack of demand visibility as project delays are increasingly becoming the baseline expectation. Intensifying equipment logjams and competition to find skilled workers, like electricians or plumbers, have hurt the industry’s outlook, according to Andrej Danis, a partner and managing director at AlixPartners.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“Two-thirds of the market expects distress within 18 months, and the investors and lenders are the most convinced of anyone,” Danis said in an interview. “This isn’t one bad input. It’s a mix of growing energy costs, thin cash flow, revenue falling short of plan, and compute prices sliding, all landing on the balance sheet at once. That’s not a demand problem. That’s a margin problem.”The report comes as pressures mount on AI data centers. Earlier this week, New York became the first state to issue a moratorium on new hyperscale data centers as communities blame power-hungry facilities for the gutting of natural resources, hogging the energy grid and raiding consumers’ wallets. In April, Blackstone Inc.-backed QTS sold a $4.6 billion green bond to finance its sprawling campus in Fayetteville, Georgia, which has faced community pushback. There’s been an avalanche of funding deals in the technology sector to build the infrastructure to power the development of AI. Fundraising in 2026 has already topped last year. At least $334.5 billion in bonds and loans have been issued year-to-date to fund AI infrastructure projects, according to data compiled by Bloomberg. For the whole of 2025, that number was $185.5 billion. But after SpaceX’s $25 billion debt deal, lender fatigue risks leaving less money for smaller projects. Cracks are already starting to show after Amazon.com Inc.’s $25 billion bond offering earlier this month. It was the technology giant’s largest ever, intended to fund its AI and data center expansion. However, the deal’s modest oversubscription and cool reception in the secondary market signaled investor burnout.More recently, data center operator Prime Data Centers LLC postponed a planned bond sale, in a sign of the limits of investor demand for AI exposure. Among neocloud operators, which build and operate AI-optimized infrastructure, smaller ones are most at risk from industry turbulence, according to Danis.“The neoclouds that survive are the ones building a viable business by selling directly to enterprise clients at scale,” Danis said.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.