The $6 million price tag Microsoft recently agreed to pay for the 100 acres of land in, West Des Moines, Iowa, is about six times the property’s value as agricultural land, an Iowa real estate broker told The Des Moines Register.
Steve Bruere, president of the People’s Co., said soil quality on the land made it worth less than $10,000 an acre, had it been used as farm land. Microsoft is paying a premium because it is planning to build a data center on it.
“This property certainly commanded a significant premium because of its use as a data center,” he told The Register.
Considering that Microsoft is planning to spend up to $1.1 billion on the West Des Moines data center expansion, the cost of land is fairly insignificant.
The high markup on land for data center use is normal, and Microsoft actually got a good deal, Bruere said. According to the paper, several past land sales for data center construction in the state also involved higher-than-normal real-estate prices.
Facebook, for example, paid about $25,000 an acre for its nearly 200-acre data center site in Altoona. Microsoft paid about $130,500 an acre for a property in West Des Moines in 2008, where it built its first data center there.
Yahoo recently bought about 18 acres of land for data center construction in Lockport, New York, at $15,000 an acre, The Buffalo News reported.