Data Center Gentrification

Data Center Gentrification

The history of the old west is filled with the legacies of what came to be referred to as “Boomtowns”. These cities were typically birthed by some geographic anomaly, like a stage coach line or a gold or silver mine, whose rise and demise spanned just a few short years but have lived on in memory. For example, we know that Tombstone was where the Earps and the Clantons squared off at the OK Corral, Deadwood was the last mailing address for Wild Bill Hickok who died holding the infamous “dead man’s hand” of aces and eights and Marshall Dillon was the law in Dodge City, except when he was hanging out with Doc, Festus and Miss Kitty—and I think we all know what she did for a living. I remind you of those thrilling days of yesteryear to help put into context the “unintended consequences” of Prineville, Oregon’s quest for modern day Boomtown status—a situation whose economic repercussions have even been discussed on National Public Radio, albeit in rather somnolent tones.

As I said, most boomtowns were the result of some geographic anomaly and Prineville’s (population 9,223) status as a prime geographic data center location certainly fits the bill. While not as a compelling and newsworthy as a gold strike, since, the last time I looked, no one is running around yelling “There’s data centers in them thar hills”, it sure seems to be drawing people to its bucolic confines.

An attribute that Prineville shares with its progenitors from the wild west is a severe lack of housing. Due to the rapid influx of workers, the limited availability of accommodations and the total lack of a hospitality industry, the folks who came to town to seek their fortunes in the olden days were often forced to fend for themselves or take residence in quickly thrown together wood boarding houses that weren’t exactly “Motel 6” level accommodations, if you get my drift. Well, Prineville finds itself in the same predicament as its hotels and rental properties are at full capacity, forcing newcomers to seek shelter in RV parks and even tents. Take it from a guy who equates staying in a Marriott to “roughing it”, coming home from a hard day to at work to a pup tent and roasting a wienie over a Coleman stove constitutes a less than optimal working environment.

This inverse relationship between the number of domiciles, and the people seeking to reside in them, has created a good news/bad news situation in the local Prineville real estate market. If you are the owner of one or more residences suitable for human habitation, this disparity is welcome news since you get the opportunity to explore the limits of the term “what the market will bear”. Unfortunately, if you are one of those seeking a new Prineville mailing address, you fall into the category of “bearee” as it were. Isn’t this always the problem with these boomtown-like arrangements? The initial excitement about the prospect of the influx of a new high wage earning professional class stimulating a trickle-down effect resulting in a new 7-11 or McDonalds (maybe both) and a re-emergence of Main Street as the place to go for fine handmade crafts, coffee mugs emblazoned with the town logo and locally produced jams and jellies, is offset by the fact long-time residents can’t afford to live there anymore and newcomers expect a little more for their “just this side of Manhattan rents” than a cultural scene that is dominated by the monthly pancake supper down at the local VFW.
For the more zen among you, you may view the current housing situation in Prineville as an example of the many ripples that result from the dropping of a single stone into a pond. And you’d be right, in a “new agey” sort of way. The more practical Prineville resident, or those aspiring to be, just say that it’s expensive to live there. Fortunately, unlike in the boomtown days, data centers will have a longer lifespan than the OK Corral or gold and silver mines, and, as a result, one or more savvy entrepreneurs will come forward to build some nice multi-family housing, or a sub-division or two, to make Prineville the pleasant oasis that everyone wants it to be. This will take a little time since, unlike a lot of data centers these days, you just can’t slap these things together in less than six months, but ultimately the inherent level-setting function of the market will rescue the city from its present case of “boomtownitis”. While it may never reach the level of urban density to qualify as a sprawling metropolis, the arrival of affordable housing will help Prineville serve as an inspiration for other rural areas seeking to join the roster of little known bastions of small town Americana that are home to a million or so square feet of processing and storage capability. And to those who continue to pooh-pooh these examples of “rural renewal” by saying “data centers don’t create that many new jobs” just try telling that to the newest employees at the 7-11 or McDonalds. God Bless America.