For about price of land and connectivity - in large city land price begin on few millions dollars per square kilometer, and usage of cable channels could cost from 50$ per meter (easy could be 200$/m).

Plus, space arrange could last years.

Heat dissipation in range of megawatts could be just prohibited by local regulations.

So, space in large cities is very serious problem, and for business it is usually easier to "compress" as much computing power as possible in one rack.

Bigger chips = more distance to cover for your electrons = more power required = more generated heat = slower throughput for your data.

Surely you don't believe that the entire chip industry had not thought of "wait what if we just make the chips bigger".

You cannot place dc anywhere, in large cities space is extremely constrained, and land is extremely expensive.

Also big problem - connectivity - you cannot place DC where it cannot be connected to power grid and to very powerful network.

So yes, DC floor space is severely limited.

And the third issue - last decades, rack servers dissipate extremely large amounts of heat, I hear numbers up to tens Kilowatts per rack, which is just hard to dissipate with air cooling (as example, all IBM Power servers have option of liquid cooling, but this is totally different price range).