Mark Muro and his team at Brookings just published something every economic development professional needs to read: “Turning the data center boom into long-term, local prosperity.” It’s the clearest analysis I’ve seen on what’s actually happening in data center negotiations, and why communities finally have a seat at the table.
For context: I met Mark years ago when he and his team were assisting us in Erie on the Metro 100, he has been tracking regional economic development, tech ecosystems, and place-based industrial strategy for decades. When he writes about shifts in economic development practice, it’s worth paying attention.
The Old Model is Breaking Down
For years, data center deals followed a predictable pattern: tech companies set the terms, communities competed desperately, and “economic development” meant construction jobs, tax revenue, and minimal long-term employment. Those are all good things; however, The AI boom has changed the model. So called “Hyperscalers” like Google, Microsoft, and OpenAI need unprecedented computing infrastructure immediately. They’re competing against each other for limited mega-sites with grid access. Communities are pushing back on electricity demands and deals that deliver nothing beyond property taxes.
The result? Communities have actual negotiating leverage for the first time in years.
Regions are now asking for, and getting, commitments that go far beyond traditional incentives: shared compute resources for universities and startups, R&D partnerships aligned with regional strengths, workforce development programs, community equity participation in real estate deals, and energy innovation testbeds.
Microsoft’s Wisconsin buildout exemplifies this. Beyond data centers, the company partnered with UW-Madison on AI research, opened an AI Co-Innovation Lab at UW-Milwaukee for manufacturing, launched a Datacenter Academy at Gateway Technical College, and trained over 114,000 Wisconsinites in AI. That’s not traditional economic development, that’s ecosystem building.
The Challenge: Most ED Organizations Aren’t Ready
Here’s what makes this critical: data center negotiations are becoming economic development strategy sessions, not site selection exercises. Communities treating these as isolated real estate transactions get isolated projects. Communities treating them as ecosystem opportunities extract commitments that transform regional capacity.
One of the challenges is that many economic development organizations aren’t structured for this. You need to coordinate state incentive authorities, regional planning, university research offices, workforce boards, utilities, energy regulators, and local permitting. And you need to do it quickly—hyperscalers making billion-dollar commitments won’t wait six months.
If you’re negotiating deals that include R&D partnerships, workforce commitments across multiple institutions, startup programs, compute access agreements, and energy pilots, you need systematic ways to track commitments, manage partnerships, coordinate stakeholders, and demonstrate outcomes.
These aren’t traditional business retention relationships. They’re complex, multi-year, multi-party agreements requiring coordination across organizations that don’t typically work together.
At ExecutivePulse, we’re seeing this with clients managing major infrastructure projects. Organizations succeeding have systems to track partnership commitments, coordinate stakeholders, and demonstrate progress on ecosystem goals—not just job numbers. Our sister company Altair Consulting Group is working with communities and universities on exactly these strategic partnership, translating data center negotiations into comprehensive strategies that align regional assets with tech company commitments.
The Window is Now
This shift is happening now. Pennsylvania ($90B in announcements), Michigan (OpenAI’s Stargate near Ann Arbor), New Jersey (CoreWeave’s NJ AI Hub partnership) are demonstrating what’s possible. Communities getting this right understand their competitive advantages, have stakeholder relationships in place before negotiations start, can move quickly with coordinated responses, think in ecosystems not projects, and have systems to manage complex commitments over time.
The old model, competing on tax incentives and hoping for construction jobs, is giving way to something more substantial. Communities with sophistication to negotiate comprehensive partnerships are extracting real value from data center investments.
The question is whether your organization is ready for that conversation when it comes to your region?
By Chuck Peters
Advisor, ExecutivePulse | Chair, Government Affairs Committee, Erie Regional Chamber | Board Member, Infinite Erie & Ben Franklin Technology Development Authority, | Managing Partner, Altair Holdings.