Iowa and North Carolina are emerging as affordable markets for data center development, according to The Boyd Company of Princeton, N.J., which has issued its 2008 ranking of the most affordable sites to operate a data center in the U.S. The new data updates an initial data center affordability study last year by Boyd, which has since been widely cited by regional economic development agencies seeking to attract data center projects.
The good news: demand for data centers remains strong, according to John Boyd, president of The Boyd Company, who helps many of America’s best-known companies plan real estate expansions. “This is a shining star industry,” said Boyd. “It’s a booming sector.”
The study highlights the affordability of smaller markets in the center of the U.S., and is based on site selection criteria for single-tenant corporate data centers. But it also provides useful data for comparing major data center markets.
The estimates are based on the annual cost of operating a 125,000 square foot financial services data center, and includes the cost of land, labor, power and property taxes. Boyd also prioritizes markets that have a nearby college with programs providing certification in information security.
In a repeat of last year, Sioux Falls, South Dakota had the best cost profile for data center operations, with an estimated annual cost of $11.2 million, followed by aerospace hub Huntsville, Alabama ($11.7 million) and Bloomington, Indiana ($11.8 million).
But the study held good news for Iowa, which had three cities – Council Bluffs, Ames and Des Moines – place among the top 10 for affordability. Google is building a $600 million data center in Council Bluffs, while Microsoft has said it is considering a major data center project in Iowa. The state has also proven to be fertile territory for TEAM Companies, a regional provider focused on the Midwest.
North Carolina also had two markets in the top 10, including Winston-Salem and Charlotte. In 2007 the state attracted data center projects by Google, NetApp and Ralph Lauren. Perhaps the biggest success stories have been two home-grown regional providers. Charlotte-based Peak 10 just raised $60 million in expansion funding, while Hosted Solutions was just acquired by ABRY Partners for $100 million.
Both states also offer incentives to major data center developments. They’re not alone any more, as more states and local economic development agencies are actively seeking data center projects.
“Competition is fierce among the states,” said Boyd. “The data center industry is being better understood by the economic development industry nationally. Budgets are big, and Madison Avenue techniques are being deployed to attract business. You fish where the fish are, and (the data center sector) is a growth industry. But it’s also a business that not every state can make a legitimate case for.”