HSBC has postponed a huge data center project in upstate New York, citing the "business climate." The decision by HSBC is the first sign that recent losses in the subprime mortgage market may prompt major financial companies to reassess the pace of their data center construction spending.
HSBC (HBC) left open the possibility that it may eventually build a data center in Niagara County, and local officials are hoping the decision is based on site location issues, rather than a wholesale decision to curtail the project. In May HSBC confirmed its plans to build a $139 million data center, to be followed by ongoing spending of $55 million a year over 15 years for a total investment of nearly $1 billion.
But early this month the bank decided not to buy the land it had targeted for the development in the small farm town of Cambria (pop. 5,000). After several weeks of rumors, HSBC issued a statement last week to local media.
"Given the current overall business climate, we are not proceeding at the original development pace we had planned for our data center in Niagara County, New York," said the statement from HSBC spokesperson Francine Minadeo. "We remain in the planning phase and will take appropriate steps to update local officials and surrounding communities as is necessary and appropriate."
Local officials remain hopeful that the decision reflects a temporary setback for the huge project. "Our staff is in constant communication with HSBC, and all indications are they are going to go forward with a project (in the county)," said Niagara County Economic Development Commissioner Samuel Ferraro. But Ferraro confirmed that if HSBC picks another site it will forfeit $89.5 million in tax breaks from the county