The Pentagon has opened at least a dozen military installations to commercial data center developers, with two conditional deals already awarded that would put hyperscale computing facilities on Army land in Texas and Utah. Each project is estimated to cost about $2 billion, creating a new category of large-scale infrastructure work for real estate and construction firms that must navigate federal land leases, independent power generation, and net-zero water requirements.
The Army's Enhanced Use Lease program, accelerated by a Trump executive order directing agencies to open non-excess federal land to data center development, lets private companies finance, build, operate, and eventually decommission facilities on "underutilized but non-excess Army land at no upfront cost to taxpayers." In exchange, the military gets access to computing power. The U.S. Army Corps of Engineers is handling lease negotiations and environmental review for the awarded sites.
The deals so far
Carlyle, the global investment firm, was conditionally selected for roughly 1,384 acres at Fort Bliss, Texas. CyrusOne, a data center operator jointly held by funds managed by KKR and BlackRock, was picked for about 1,201 acres at Dugway Proving Ground, Utah. Both remain subject to final negotiations. The Dugway site sits on ground previously used for grazing, roughly an hour's drive from the nearest community, on the installation where the military conducts chemical and biological weapons testing.
"AI is a strategic asset for the Army," Army Secretary Dan Driscoll said in the March announcement. "It is a force multiplier, supports future transformation and requirements, keeps the Army ahead of our adversaries, and generates resiliency across the force." Driscoll told the Wall Street Journal that the Fort Bliss facility would be "the first hyper-scale data center that the Pentagon has ever done."
Where the data centers could go
Beyond the two awarded parcels, federal contracting documents show the Army considering sites at Fort Hood, Texas (207 acres) and Fort Bragg, North Carolina. The Department of the Air Force has sought bidders for unused land at Arnold Air Force Base in Tennessee, Edwards in California, Joint Base McGuire-Dix-Lakehurst in New Jersey, Davis-Monthan in Arizona, Robins in Georgia, and three Alaska installations: Joint Base Elmendorf-Richardson, Eielson Air Force Base, and Clear Space Force Station. Acreage varies widely; Fort Bliss offers nearly seven times the land area of Fort Hood.
Some proposed locations sit close to civilian populations. Contracting documents show the Army weighing a Fort Hood parcel within a half-mile of residential and commercial property, and several potential Fort Bragg locations within one mile of civilian areas and a half-mile of civilian housing.
Water, power and community pushback
Data center opposition in civilian markets has delayed or canceled nearly $156 billion in projects nationwide, according to Data Center Watch. In Virginia, a state-funded study found residents' monthly energy bills could rise by $14 to $37 by 2040. The Army has attached two requirements not found in off-base commercial builds: proposals must include net-zero water usage and a power plan that does not draw on the local electrical grid. Bidders also had to describe plans for local outreach and assess any risks or opposition.
"So I think the difference between us, the Army, doing a data center, and say Meta or Google, is we're part of the communities that are there, and we are going to engage with them on a routine and regular basis to look for solutions that work for everyone, right?" Col. John Oliver, executive officer for Deputy Army Under Secretary Dave Fitzgerald, told Defense One. "Because, yes, we understand that there's been consternation with data centers."
Defense Department procurement documents rate the water risk for the El Paso area as "Extremely High." One idea under discussion would have the developer drill a new well to feed the city's desalination plant, offsetting the data center's consumption. "We are encouraging Carlyle to do that, so actually make it net-positive," Oliver said. "We don't know if that's an engineering solution that we can actually get to yet, but we're actively working toward that as a part of the process." Darrell M. West, a senior fellow at Brookings, said communities that accept data centers tend to be those told the full details in advance: "People want to know up-front, you know, where the energy is coming from, how much water is being used, how much the overall cost is going to be, and what the noise levels are."
Congress weighs in
Rep. Cory Mills, R-Fla., secured a House provision in the fiscal 2027 defense authorization bill that bars the Defense Department from leasing land for data centers unless developers agree not to install equipment containing components made in China, Russia, Iran or North Korea. The Army objected, calling the measure a "federal land penalty" that would impose rules on installation projects not required elsewhere. "We want Congress to incentivize companies to build on secure federal land, rather than creating barriers that drive them away," a service official told Federal News Network.
Rep. John Garamendi, D-Calif., proposed requiring the Pentagon to evaluate a data center's energy and water consumption, noise and light pollution, and effects on security and supply chains before finalizing any deal. House Armed Services Republicans rejected it. A Senate Democratic amendment to block leasing until the Pentagon finalizes a data center strategy was also defeated. House appropriators adopted language acknowledging that data centers "place significant strain on energy and water resources and communities have resisted such projects."
Why this matters for real estate and construction
For developers and contractors, these projects represent a distinct opportunity with hard constraints. Initial operating capability at Fort Bliss is projected for fiscal 2027 and at Dugway for fiscal 2029-not a finished campus, but the point when first computing power comes online. Developers must build independent power generation that does not tap the local grid and meet net-zero water use. Excess power could potentially be sold back to civilian grids. Environmental reviews are underway at both awarded sites, and the Association of Defense Communities plans further discussion at its Installation Innovation Forum in October 2026. For professionals tracking how AI for Real Estate & Construction is reshaping land development, these military data center deals offer an early look at the infrastructure demands, regulatory hurdles, and community engagement strategies that will define the next wave of hyperscale projects.
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