With demand for pre-built data center space continuing to grow, you’d expect to find facilities being built all across the country, with a concentration in major markets, some outliers, and a general distribution around other areas. To some extent, that’s true. But the distribution is hardly uniform, with competing providers and in-house facilities alike suddenly cropping up next to each other.
So what makes these data center clusters happen? Wouldn’t builders like to place facilities in more diverse areas in order to avoid cascading or single-point failures from the same power outage or natural disaster? The decision to build in a cluster goes beyond offering competition in a popular area.
Green House Data’s own data center in Orangeburg, NY is a part of one of these clusters of development, and there are a number of factors why we joined Bloomberg’s giant facility just down Ramland Rd.
Demand is increasing across the country, including major markets like New York City. But data center growth is sluggish, with most providers increasing density rather than building new facilities. Part of that is due to ridiculously high real estate prices. In NYC, power usage is increasing at twice the rate of new data center construction. There’s only so much power a single rack can handle, even with new technologies, so this increase in density is hardly sustainable. That makes nearby locations more attractive.
In secondary markets, enterprises are just starting to grow out of their old data centers, or recognize they require significant investment to bring them up to date. That’s brought a new wave of providers to clusters in regions that previously only held in-house data centers.
Together, these two factors lead to clusters developing around new or growing markets or just outside major population centers, where land or buildings are cheap and demand stable.
We’ve watched the ripple effect of regional marketing and incentives flow out from major markets, through secondary markets, and into previously unknown areas around the country. These days, dozens of states have data center specific tax incentives to try and get an edge attracting development and jobs.
Just five to ten years ago, San Antonio and Quincy, WA experienced this kind of boom, with a focus on low power rates and cheap land. Our own Cheyenne, WY data center was part of a sudden flurry of development alongside Microsoft, Echostar, and others, largely thanks to state grants, inexpensive power, and proximity to fiber.
In Orangeburg, local economic development planners Rockland County Industrial Authority have extended tax breaks and sales tax incentives to Bloomberg, 1547 Critical Systems Realty, and others. These incentives allow operators like Green House Data to extend sales tax exemptions to customers, eliminating the 8.4% sales tax on data center equipment for potential savings in the thousands of dollars. Of course, this also makes it less expensive for us to provision our own data center space as well.
The RIDA has said they aim to recruit more data centers in the Rockland County New York area, specifically around Ramland Rd.
A particularly safe area often attracts more data centers due to the importance and expense of IT equipment. However, the safest areas in the country are often the most remote. In Cheyenne, we have the best of both worlds, with proximity to the Denver metro, site safety, and reliable power and broadband.
In Orangeburg, NY, it’s more of a tradeoff between a location near New York City and safety from floods and hurricanes. The area is remote enough to be much less prone to flooding, while maintaining low latencies for businesses in the metro area.
Cooling is another factor influenced by site selection. Areas with cooler and more stable year-round temperatures allow data center operators to use ambient air or cooling economizers to meet much (or all) of their cooling requirements without the additional expense, maintenance, and environmental impact of CRACs and traditional air conditioning.
Orangeburg sits right on the line between 6,500 and 5,500 potential free cooling hours per year, the third highest tier in the country. Our New York data center can use economizers for more efficient cooling up to 75% of the year. While we haven’t spoken to them about it, we presume Bloomberg’s facilities team is taking similar advantage.
These two factors are arguably the most crucial for data centers, so they’re marketed heavily and play a major factor in data center clusters.
In Orangeburg, part of the tax incentive plan at 1 Ramland Rd includes about $40 million dollars earmarked to develop additional fiber infrastructure. These investments benefit more than the data center operator, bringing high speed internet into the region for both businesses and residents.
Some of this development is convincing providers to build infrastructure on their end. Some of it is purchasing actual last-mile hookups to business parks and data center facilities. 1 Ramland Rd will eventually have more than a half-dozen ISPs available in the facility. When development began, there were only three.
Once one data center starts investing in infrastructure, others are able to take advantage of the new connectivity and power available.
Power also plays a crucial role. For Ramland Rd data centers in Orangeburg, NY, the proximity of two independent substations makes the site much more attractive. The reliability of the grid can make or break site selection, and clusters often spring up where the juice is flowing consistently.
All of these factors, plus the availability of real estate, existing buildings ready to be converted to white space, and the talent pool of local workers: these are the major reasons why data centers often end up developing in close proximity to one another.
What other things might influence your choice of a data center location? Would you prefer to be close or far away from a competing data center?