Data Center Development in Texas: What Landowners Should Know

by Attorney & Counselor, Nathan Yates

This is not your average land deal and we are breaking down what you need to know.

Data center development has become a significant part of the development conversation across Texas. For landowners, that can mean receiving an offer to purchase or lease property, including a request for an option agreement and permission for a developer to begin investigating whether the property can support a project.

The first question may be, “Is this a good offer?”

While compensation is always important to carefully evaluate,  price is only part of the decision.

Before signing, a Texas landowner should understand what rights the developer is receiving and what rights are necessary and appropriate for proper due diligence and development, how long those rights may remain in place, what activities can occur on the property, what happens if the development never moves forward, and how the transaction fits into the landowner’s broader future planning.

That analysis has become increasingly relevant as data center development expands. In June 2026, ERCOT was tracking approximately 438 gigawatts of proposed large loads seeking interconnection, with data centers representing about 89% of those requests. Importantly, proposed interconnection requests are not the same as completed projects or actual future electricity demand, but they illustrate the scale of development activity being considered in Texas.

Start With a Bigger Question: Is This the Right Use of Your Land?

A substantial offer can naturally attract attention. It should not automatically determine the answer.

Landowners may want to consider what the property means to them today and what they want it to accomplish in the future. A ranch, farm, inherited tract, development property, or investment parcel may have value beyond its current market price and an individualized analysis may be needed for any one particular property.

Consider questions such as:

• Do you want to continue agricultural, recreational, residential, or business uses on the property during the option period or on adjacent property after the sale?
• Could the transaction affect future development opportunities on adjacent property?
• Are you selling the entire property or only part of it, and are you ok allowing the development company to choose what portion to purchase or not?
• How could roads, utilities, transmission infrastructure, drainage, or other improvements affect the remaining acreage?
• Are there family, estate planning, tax, or succession considerations?
• How does a lease or long-term agreement limit future flexibility?
• What happens to the property if the project is studied but never constructed?

There is no single correct answer. Two neighboring landowners with similar acreage may reasonably reach different conclusions because their priorities, ownership structures, financial goals, and long-term plans are different.

The goal is to make the decision intentionally and armed with knowledge.

Understand What You Are Actually Being Asked to Sign

A data center transaction may involve more than a straightforward purchase contract. Depending on the project, a landowner could encounter an option agreement, purchase and sale agreement, lease, access agreement, easement, confidentiality agreement, or some combination of documents.

An option agreement, for example, may give a developer the right to purchase or lease the property during a defined period while the developer investigates whether the project is feasible. For the landowner, the details matter. How long does the option last? Can it be extended? What compensation does the landowner receive during that time? Can the landowner lease, finance, improve, or otherwise use the property in the manner of their choosing while the option is outstanding?

A seemingly small provision can affect the owner’s control of the property for months or years.

Pay Close Attention to the Due Diligence Option Period

Before committing substantial capital to a project, a developer will typically want time and access to investigate the property.

That investigation may include surveying, environmental review, utility studies, engineering work, soil testing, drainage evaluation, title review, infrastructure planning, and other onsite activities.

A landowner should understand both how long the developer has to conduct due diligence and what the developer is permitted to do during that period.

Important questions may include:

• Who can enter the property?
• How much advance notice is required?
• What testing or physical disturbance is permitted?
• Can contractors or consultants enter independently?
• Who is responsible for damage to fences, roads, crops, livestock areas, or other improvements?
• What insurance requirements apply?
• Must disturbed areas be restored?
• What happens if the developer decides not to proceed?

The agreement should give the developer the access reasonably needed to adequately evaluate the site while also addressing how the land and ongoing operations will be protected.

Evaluate More Than the Headline Purchase Price or Rent

Financial terms extend beyond the number at the top of the offer.

Depending on the structure, landowners should understand option payments, extension payments, deposits, purchase price adjustments, lease payments, escalation provisions, closing conditions, reimbursement obligations, and the timing of each payment.

Timing also carries value.

If a developer can control a property for an extended period before deciding whether to proceed, the landowner’s loss of ability to pursue other buyers or uses during that time should be fully considered.

That does not necessarily make the arrangement unfavorable. It means the time being requested and the flexibility being surrendered should simply be considered as part of the economics of the transaction.

Consider What Happens to the Rest of the Property

When only a portion of a larger tract is involved, the analysis should not end at the proposed project boundary.

Access roads, utility corridors, easements, drainage improvements, construction activity, fencing, transmission facilities, and other factors such as sound and lighting could affect the usefulness or value of the remaining property.

Uses during that time should be fully considered. Again, that does not necessarily make the arrangement unfavorable. However, landowners should consider impact to retained acreage such as how they will access it, where infrastructure may be located, whether agricultural or recreational operations can continue in the same manner, and how future development of the remainder could be affected.

This is where thinking beyond the immediate transaction becomes especially important.

A term that works financially today could influence how property can be owned, operated, developed, conserved, transferred, or sold years from now.

Negotiation Is About Creating a Clear Agreement

Receiving a proposed agreement does not necessarily mean every provision must be accepted as presented.

Legal counsel can help a landowner identify provisions that warrant additional discussion, understand the consequences of contractual language, and determine where protections or greater clarity may be appropriate.

The objective is not simply to make a transaction more difficult.

A well-considered agreement can establish clearer expectations for both sides by defining access, timelines, responsibilities, financial terms, property protections, restoration obligations, closing conditions, and what happens if the project does not proceed.

The Landowner’s Decision Comes First

Data centers can present significant economic opportunities, but whether a particular project is right for a particular property depends on much more than the type of development.

Braun & Gresham is neither for nor against data center development. Our role is to advocate for the Texas landowner.

Before entering a transaction, landowners should fully understand the proposed deal, the rights they are giving another party, the potential effects on their property, and the options available to them.

The ultimate goal is not simply to complete a transaction. It is to make an informed decision.

Key Takeaways

• Evaluate the entire transaction, not just the offered purchase price or rent.
• Understand how option periods and extensions may affect your control of the property.
• Clearly define due diligence access, onsite activities, damage responsibility, and restoration.
• Consider how the project and related infrastructure could affect any land you retain.
• Evaluate the opportunity in the context of your financial, operational, family, and long-term goals.

If a data center developer has approached you about purchasing, leasing, accessing, or placing an option on your Texas property, Braun & Gresham can help you understand the proposed transaction, evaluate your options, and determine an appropriate path forward.