5 States That Offer Big Data Center Appeal

Does data center location matter? Just ask Google and Apple. The largest companies in the tech sector operate multiple data centers. Where they put them says a lot.

You might think the Pacific Northwest is the natural hub for data centers. You’re right. But data centers are also popping up in America’s Heartland, the Southwest and the Rockies. Here are some of the top locations in the United States to consider. (Don’t forget about Canada, an attractive choice thanks to cheap energy, low temperatures, skilled labor and political stability.)

John Brandon is a former IT manager at a Fortune 100 company who now writes about technology. He has written more than 2,500 articles in the past 10 years. Follow him on Twitter @jmbrandonbb.

One distinct advantage to Oregon as a data center location is the low likelihood of natural disaster. (Arcadia isn’t exactly a hotspot for tornadoes or earthquakes.) Plus, says Logicalis Data Center Director Bob Mobach, utility costs are lower thanks to hydroelectric power generation. So-called “free cooling” methods, which use outside air for data center cooling, also help. Temps reach 85 degrees Fahrenheit on typical summer days and drop to 50 at night.

But tax incentives remain one of the biggest draws for companies such as Apple, Microsoft and Facebook. A data center in the Beaver State is taxed like a warehouse or factory, Mobach says, as opposed to a corporate office.

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Known more for corn fields, Iowa has housed a Google data center in Council Bluffs since 2009, while Microsoft plans to build in West Des Moines.

There’s a reason for this activity, says Hank Koch, vice president of data center facilities at TDS. Iowa has the nation’s second-largest installation of on-grid wind turbine, which translates to lower utility rates.

The Hawkeye State also has low crime and isn’t a prime target for terrorist activity. For about eight months, cooler temps on the Plains mean lower cooling costs. There’s also plenty of room for expansion, easy access to major highways and lower labor costs than, say, New York or California. One downside: Summer tornadoes.

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Like Oregon and other states that depend on hydroelectric power generation, Washington state is a prime location for a data center. According to Cal Braunstein, chairman, CEO and chief research officer at the Robert Frances Group, an executive advisory company, Washington is one of the greenest states.

Energy costs might be lower in Iowa, he says, but 77 percent of that is coal-generated power. In Washington state, costs are higher, but 71 percent of the power is generated using hydroelectric dams. There’s also a greater influx of technical workers, he says.

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Wyoming may lack the cost advantages of Iowa or abundant hydroelectricity of Washington or Idaho, but there’s a new experimental power source: Wastewater. Microsoft recently opened a test facility near the Wyoming Dry Creek Water Reclamation Facility in Cheyenne. (The company has a second DC nearby for cloud storage.)

Sean James, Microsoft’s data center advanced development research manager, says the “biogas” is 100 percent renewable. Bacteria break down the wastewater, sulfur and humidity is removed, and the power is converted to fuel cells that run off hydrogen.

The Equality State is also attractive due to a high concentration of skilled technical labor in its largest cities, while natural disasters are rare compared to states such as Florida (hurricanes) or California (earthquakes). Business-friendly tax laws also help.

The Grand Canyon State made recent headlines by passing a new tax incentive that exempts data center equipment from sales and use taxes for 10 years. According to FireHost, a data center hosting company, Arizona is also a prime locale for data centers because of the low risk for natural disasters such as tornadoes and earthquakes.

Arizona also boasts a high concentration of IT workers—and that labor force will continue to grow as more companies build in the Phoenix area. Another major perk: Arizona is centrally located between technical hubs such as Dallas and Los Angeles, so data centers are easy for existing IT staff to access.

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