Emerging Data Center Hot Spots
A recent industry report noted at FierceFinanceIT.com, Banking & Financial Services: A Comparative Cost Analysis for Information Assurance Operations, commented on the best venues for locating data centers – particularly those aimed at highly secure, data security operations. A number of hot spots have emerged around the US, based on a host of considerations that play into financial and strategic decision points. Land and construction costs, regional utility costs, existing telecommunications infrastructure, and a talented local workforce are also key considerations.
Key Drivers Impacting Data-Keeping and Information Assurance Demand
From a business perspective, the booming data center business really transcends virtually all markets and industries from manufacturing to governments, recognizing the exponential growth of data in the form of processing, storage, all things cloud computing, and information assurance/data security. The financial services industry especially is leading the need for expansion and build-out as a result of significant changes in record-keeping mandates, and the resulting volume of data to manage. Of course, protecting and defending banking information and systems in turn represents a strong potential in capital spending and site selection. High profile cases of hackers in the weekly media supports the urgency to manage information assurance across the enterprise.
As mentioned, evolving financial record-keeping requirements, coupled with the impact of a federal government decision to consolidate data centers means the demand for facilities is present. Some examples of the external influences at work include the following:
- The 2002 Sarbanes-Oxley Act set-off a new era of corporate accountability, which requires more data-keeping records.
- The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act imposes additional record-keeping requirements of financial institutions.
- In 2011, President Obama announced an initiative to consolidate nearly half of the federal government’s 3,000 data centers over the next three years. The move paves the way for transitioning from high-cost areas like Washington D.C., New York City and the Bay Area to more affordable land and operations costs inherent to other regions.
Among the top cities identified as trending hot spots for data center facilities are: Sioux Falls, S.D. Tulsa, Oklahoma. Ames and Council Bluff, Iowa, Bloomington, Indiana, Albuquerque, New. Mexico, San Antonio and Denton,Texas, Omaha, Nebraska, and Colorado Springs, Colorado.
Beyond the basics of utility cost and infrastructure, there are incentive programs that certain states or regions have put in place to specifically attract data center business. Colorado Springs for example, has become a highly attractive location on several levels. Some of the lowest energy costs in the nation, a strong telecommunications infrastructure and a skilled local workforce are basic attention getters. The inherent geography of the region offers natural cooling for a majority of days each year, and the area posses very low risk in terms of potential natural disasters like earthquakes. What gives the region an incredible boost comes in the form of State friendly incentives that make doing business in Colorado Springs a deal most CFOs would have a difficult time refusing.
Vineyards Data Center Park development, located within Colorado Springs, was designated an Urban Renewal site when the City Council unanimously approved creation of the special taxing district. This made available $55 million in public funds to pay for improvements such as telecommunications infrastructure, utility improvements and roads. The project site has also been qualified as an Enterprise Zone, allowing for investment tax credits on the purchase of capitalized equipment and furnishings.
Further, the site is a recipient of federal government based New Market Tax Credits. A program aimed at revitalizing impoverished communities, allowing tax credit incentives to investors amounting to 39% of the investment paid out – over a period of seven years. All together, the combination of financing and NMTC brings a reduction of the capital cost of constructing a data center at the Vineyards to an estimated 40 to 50% of comparable sites.
A number of high profile organizations have already placed facilities in the region including Verizon Wireless, HP, FedEx, T. Rowe Price, Progressive, Agilent, Intel and most recently Walmart started to break ground on their new data center in Colorado Springs. With all of the activity in the data center space, companies such as Wired Real Estate specializing in the data center real estate marketplace, advises businesses and financial investors on data center planning, brokerage and financing, including investment opportunities. Nationally, the firm represents nearly 1M square feet of colocation and data center space, including major data center developments in Chicago, Denver, Colorado Springs, Dallas, San Francisco, Silicon Valley, New York, New Jersey, and Seattle. For further guidance on the emerging top cities, or to search over 1600 data centers, go to www.wiredre.com.