December 2, 2014
It used to be that if you were looking for a data center your search was pretty much limited to just a few of the country’s larger metro areas. For example, when I first started with Digital Realty Trust, the company’s name was still three words long, and we mainly built facilities in places like New York/New Jersey, northern Virginia, Chicago, Dallas and the Silicon Valley. Made sense, the facilities were expensive to build and we needed to build them where there were high concentrations of enterprise-sized companies. We weren’t alone in using this strategy and in some locations you could see a competitor’s data center from the front door of one of ours. Well, that was then, and, boy, have things changed. Digital dropped the “Trust”, I founded Compass and now people are building data centers everywhere.
CBRE recently published a report on the cheapest places to lease data centers. Their findings were quite interesting regarding things like the variations in cost and the effects of tax incentives but what really caught my eye were the locations that they included in the report. For example, among the seven areas they deemed most cost effective were Colorado Springs, Portland and Seattle with Des Moines, northern Florida and Omaha being included at the opposite end of the spectrum. Only a few short years ago would these places have made anyone’s list of data center havens. Sure maybe the folks in Iowa, Florida and Nebraska may have some work to do to move up the cost effective list but the fact that they are on it at all points to the ubiquity of these processing and storage facilities.
Obviously the old rules are changing from a customer perspective. They want their data centers where they want them and those locations don’t necessarily coincide with many wholesale provider business models. Sure, some locations seem to have a bit of a windfall aspect to them—five years ago if someone had said there would be a gargantuan data center in Iowa I probably would have looked at them like they had a third eyeball—but once somebody builds in a new area others seem to follow pretty quickly. And its not just the old “square states” that are now turning the non-traditional location into the traditional. Here at Compass, for example, we’ve already built sites for customers in such formally non-traditional data center meccas like Nashville, Minneapolis and Raleigh, and we’ve had inquiries from locations that typically don’t show up on anybody’s radar like Honolulu, Buffalo and Saskatchewan.
Certainly this geographic proliferation of data centers gives new hope to areas that would not have been considered for anyone’s new facility like my marketing guy’s hometown of Detroit, but more importantly, it reflects the desire, and need, of moving data storage and processing capability closer to the end user. Innovations like the Cloud will continue to drive this new level of market inclusion as well as the continued desire on the part of many enterprises to keep the domiciles of their most important applications near them. Duluth, for example, may not be anyone’s idea of the nation’s most desirable summer vacation spot, but if that’s where you want a data center, that’s where it should be. It will be interesting to see how this new geographic evolution progresses. When CBRE does their survey in another five years would anyone be surprised to see places like Caspar, Wyoming or Butte, Montana on the list? While no one can say for sure, these new trends in data center location sure give the locals reason to hope.