Growing local opposition to data centres is reshaping how limited partners evaluate infrastructure deals. LPs are starting to factor community resistance into their decision-making, questioning which projects will clear permitting hurdles and which will stall. The license to operate for data centres is moving from a routine regulatory step to a material risk factor that fund managers must address.

Infrastructure fund managers have long leaned on data centres as reliable yield plays, but that assumption is under pressure. LPs are scrutinizing ESG risks and permitting challenges more closely, and some are pulling back from new allocations. The shift could slow capital flows into what was positioned as one of digital infrastructure's safer bets.

The squeeze hits fund managers with heavy data centre exposure hardest. Allocation committees now demand stronger answers on community impact before committing capital. For an asset class built on stable operating permits, this scrutiny is a real test of appetite.