Aquifer Thermal Energy Storage (ATES) is a building technology used to seasonally store thermal energy in the subsurface, which can reduce the energy use of larger buildings by more than half. The spatial layout of ATES systems is a key aspect for the technology, as thermal interactions between neighboring systems can degrade system performance. In light of this issue, current planning policies for ATES aim to avoid thermal interactions; however, under such policies, some urban areas already lack space for the further development of ATES, limiting achievable energy savings. We show how information exchange between ATES systems can support the dynamic management of thermal interactions, so that a significantly denser layout can be applied to increase energy savings in a given area without affecting system performance. To illustrate this approach, we simulate a distributed control framework across a range of scenarios for spatial planning and ATES operation in the city center of Utrecht, in The Netherlands. The results indicate that the dynamic management of thermal interactions can improve specific greenhouse gas savings by up to 40% per unit of allocated subsurface volume, for an equivalent level of ATES economic performance. However, taking advantage of this approach will require revised spatial planning policies to allow a denser development of ATES in urban areas.