Why Wall Street West Has Struggled
May 26th, 2008 By: Rich Miller
The Allentown Morning Call has a feature story exploring the failure of Pennsylvania’s Wall Street West project to attract any major financial data centers to the state. The article cites several factors, especially the lack of any existing fiber infrastructure or facilities. Wall Street West officials admit that interest in the project from top financial firms has waned, and some officials are now emphasizing its potential for boosting job training, rather than attracting facilities and jobs.
Wall Street West is a partnership of more then two dozen organizations and agencies working to promote northeastern Pennsylvania as a destination for backup data centers for Wall Street firms. Thus far the initiative has attracted one company, which will create 10 jobs. Level 3 was hired to build a $40 million high-speed fiber network between lower Manhattan and East Stroudsburg, Pa. But the Morning Call reports that work on the line won’t begin until financial services firms commit to locate in the region and buy services from Level 3, creating a chicken vs. egg challenge, since tenants are reluctant to commit to huge investments in data centers with no existing fiber.
An industry acquaintance recently asked my thoughts on Wall Street West. My reflexive response: Wall Street West will get lots of interest the day after the final viable data center development site in New Jersey is completed.
Wall Street West has languished while central New Jersey has developed into a hot market, driven by demand from New York financial firms. The largest data center developer, Digital Realty Trust (DLR), has nearly filled a building in Piscataway, and recently purchased additional properties in Piscataway and Franklin Township for future development.
Part of the challenge for Wall Street West is that the group appears to have believed that it would compete with sites in New Jersey for financial data centers requiring synchronous data transmission. The group’s marketing notes that its Pennsylvania sites are “located within the 125 fiber miles necessary for the synchronous data transmission needed by many financial services firms.” The Pennsylvania cities closest to Manhattan, Easton and East Stroudsburg, are each about 65 miles away – about 105 kilometers.
But as was noted at a recent New York data center conference, most financial institutions seeking synchronous backup are more comfortable with the distance limitation of 70 kilometers. That’s one major reason why New Jersey is thriving, and Wall Street West has thus far been unable to overcome its multiple challenges.