Microsoft’s decision to build a major data center near Boydton, Virginia provides a major boost for efforts to promote the southern region of the state as a data center destination.
Northern Virginia has always been a major data center hub, and is probably the hottest market in the country at the moment. But in recent years, economic development officials in Virginia have been actively marketing potential data center sites in the southern part of the state, an effort that has paid off with at least one large federal government data center project, and now the Microsoft project announced today.
Broadband Paves Way for Development
The growth of the Mid-Atlantic Broadband Cooperative (MBC) has boosted connectivity in southern Virginia, using money from the state’s settlement with tobacco companies to build a faster backbone to support more data centers. MBC is a not-for-profit cooperative created in 2003 to provide affordable broadband to Virginia residents, and its fiber optic network was described as a”key component” in Microsoft’s decision to locate in Virginia
“We’re very proud that our advanced fiber optic network will support the high capacity, diverse routing and low latency requirements of Microsoft’s new data center at the Boydton, Virginia GigaPark,” said Tad Deriso, President & CEO of the Mid-Atlantic Broadband Cooperative.
“From day one, the goal of MBC was to create advanced telecom infrastructure in rural Southern Virginia that would attract technology based businesses to the region,” said Deriso. “Our GigaParks are a perfect example of how private sector companies like Microsoft can benefit from an advanced telecom infrastructure in a region with a low cost operating environment.”
GigaParks are MBC’s branding of the more than 60 business and technology parks in Virginia served by its network. MBC has been spearheading the marketing of these sites at data center trade shows, working a tag-team effort with the Virginia Economic Development Partnership.
Retooling for the Future
Southern Virginia’s economic base was once built around textiles and manufacturing industries that have largely moved elsewhere, but left behind a robust electric power infrastructure and large water lines – two key factors in data center site selection.
Local officials hope Microsoft’s high profile will be a turning point in their effort to attract additional data centers. History offers hope in this regard – Microsoft’s projects in Quincy, Washington and San Antonio have preceded the emergence of data center clusters in those regions.
“We believe this selection by Microsoft will give our county the recognition it deserves in attracting future companies that deal in technology,” said Glenn Barbour, Chairman of the Mecklenburg County Board of Supervisors. “The selection of Mecklenburg County indicates that we are progressive and have the necessary tools available to offer in this high-tech age.”
New Projects in the South
In recent years projects have started to shift further south in Virginia, as providers targeting the market for ultra-secure government data center space have sought to build outside the “blast radius” of a regional disaster in Washington, D.C.
Two examples are Terremark (TMRK), which is building up to 500,000 square feet of data center space at the NAP of the Capital Regionin Culpeper, and Quality Technology Services, which is converting a huge former semiconductor plant near Richmond into one of the world’s largest data center campuses.
While southern Virginia has been in the running for major data center deals, the region faces intense competition from North Carolina, which has developed aggressive incentives to attract data center projects.
Incentives As an Enticement
That was true on the Microsoft site search as well. In July, North Carolina legislators passed a new set of targeted incentives for data centers to try and sway Microsoft. The bill allows data centers to pay only a one percent “privilege tax” on equipment and electricity used by an Internet data center.
Last year Virginia adopted targeted tax incentives to attract major data center projects to the state, offering an exemption from the Virginia Retail Sales and Use tax for computer equipment bought or leased between July 1, 2010 and June 30, 2020 for use in a data center.
To qualify for the tax break, the facility must be located in Virginia, generate capital investment of at least $150 million and create at least 50 new jobs that pay 1.5 times the prevailing average wage in the locality.
A handful of data centers have already taken advantage of the Virginia incentive. With Microsoft, there will be one more.