Small Markets Yearn for Big Data Centers

The map of the data center world is being redrawn in surprising ways, as seen in the efforts by economic development officials in Iowa and Nebraska to acquire major data center projects.

The map of the data center world is being redrawn in surprising ways. When I first began writing about data centers in 2000, the industry was focused on buildings in fiber-rich connectivity hubs, and most conversations with economic development officials included a "Data Centers 101" explanation of these facilities.

Times have certainly changed. Last week I attended the Mid-America Economic Development Council's annual "competitiveness conference" in Chicago, and spoke with a room full of officials from the Midwest who are keenly interested in attracting data center projects.

I met economic development officials from modest towns in Nebraska, Iowa and the Dakotas that were well-briefed on the industry and arrived with a mandate from their governor or mayor to compete hard for data center projects.

The booming interest in the region is driven primarily by recent decisions by the three largest Internet companies to locate major projects in the region, with Google and Microsoft choosing locations in Iowa while Yahoo has set up shop in Nebraska.

Regional interest in data centers has also been spurred by studies showing the affordability of the Midwest in housing mission-critical facilities, as illustrated in this chart of data fromThe Boyd Group on operating costs:  

This has boosted interest in data center development in places like Fremont, Nebraska, a town of 25,000 near Omaha. Fremont has identified a potential data center site with a favorable power profile, with up to 30 megawatts of capacity available at about 4 cents per kilowatt hour. Kevin Wilkins, executive director of  the Greater Fremont Development Council, is seeking an independent assessment of the site that will better equip Fremont to compete for deal like the Yahoo data center in La Vista, Nebraska.

Fremont's efforts to attract data center projects were noted recently in an article in the  Omaha World-Herald. There are plenty of other towns in the hunt, as I learned at the MAEDC event, where I presented a panel on the data center industry along with Robert Hessfrom Newmark Knight Frank.

The list of  towns actively seeking to attract data centers includes places like Marshall, Mich.; Ames, Iowa; Cedar Falls, Iowa; and state and regional agencies for North Dakota, Nebraska, Iowa and Wyoming.  

Some of these sites have already been reviewed during recent site location searches for Microsoft, Google and Yahoo. Officials in other towns are trying to understand the full range of factors and conditions that will land major data center deals, including state and local incentives and the availability of renewable energy from the local utility. 

But one thing is clear: the availability of fiber connectivity outside traditional data Internet hubs has changed the geography of data center site location. Midwest cities have realized this, and are seeking to leverage cheap power to attract projects.

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