Introduction

Oregon’s historically business-friendly approach to subsea cable infrastructure, combined with access to affordable land and abundant power, helped fuel a period of rapid growth in the state’s data center industry. Portland and Hillsboro remain attractive deployment markets, particularly because of their strong connectivity, but the factors that once supported outsize expansion are beginning to shift. Developers in Hillsboro now face a tightening supply of suitable land and renewable power, and some active projects have struggled to secure enough electricity to support facilities at full build-out.

Power availability has long been one of the region’s key advantages. Hillsboro benefited from dense electrical infrastructure originally built to support Intel’s power-intensive semiconductor fabrication operations, which began expanding in the area around 1980. That foundation enabled the market to scale alongside rising data center demand. In recent years, however, the time required to secure power has increased significantly, weakening one of the area’s most important competitive strengths.

As a result, Oregon is at risk of being overtaken by several emerging US data center markets. Recent hyperscale expansion announcements, including activity by Amazon outside Portland, may help the state maintain its position among leading markets, but growing constraints are changing the outlook. A shifting legislative environment, increasing public opposition to data center development, and greater uncertainty about permitting and regulation are all creating new challenges for future growth.

The Take

The most explosive growth in the Oregon markets appears to have passed. Land scarcity in established enterprise zones became an issue in 2024 as the last available plots in the expanded urban growth boundary were gobbled up, and purchase prices rose dramatically. The City of Hillsboro reportedly began purchasing land around the same time, presumably as a contingency strategy against losing diversification among the businesses on its tax rolls to the growing concentration of data centers. The recent removal of data centers from the Enterprise Zone tax breaks supports this idea.

The new moratorium on tax breaks for data centers also includes further study and potential legislative changes. This leaves the market in developmental uncertainty until more permanent measures are ossified. The development pipeline reflects this turbulence. The data center supply in Oregon grew at a compound annual growth rate of 29% between 2020 and 2025, but the rate is projected to decelerate to 7% over the next five years.

Some market commentators suggest that developers have started exploring sites outside Hillsboro, elsewhere in the Tualatin Valley, such as Salem or Eugene. This expansion, however, has not materialized beyond the just-announced (July 2026) Verrus project in Salem. The temporary removal of Enterprise Zone benefits will also hinder new developments, even if a city decides to sponsor them. Anti-data center attitudes are also growing in the US, and this is rapidly spreading to legislative changes. Oregon is no exception; it has recently seen multiple changes to tax incentives and large-load regulations that negatively impact data centers.

Long-term forecasting is difficult in Oregon as expansions slow and attitudes toward data centers turn more negative. Many large planned expansions in the state have yet to show signs of construction. While Oregon has not proven to be a hotbed of public pushback, the permitting process in the US is becoming fraught with delays and cancellations as resistance to data center expansion surges. In this climate, representatives seeking reelection may be wary of supporting data center projects.

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