CBRE: Data Center Site Selection Offers Significant Savings
Data center users can save up to $140 million over 10 years by choosing markets with lower tax burdens, affordable power rates and favorable weather conditions, reported CBRE Group, Los Angeles.
The potential savings represent up to 52 percent of the $270 million average project cost for a typical five megawatt center over a 10-year period.
“The ever-increasing need for data exchange, storage and security is broadening demand for data centers in the U.S., but one solution does not fit all,” said Pat Lynch, managing director of data center solutions with CBRE. “Capital and operating costs vary considerably by market.”
CBRE modeled the cost of constructing and operating a five megawatt data center in 30 U.S. markets and found that Charlotte, N.C., Colorado Springs, Colo., Portland, Ore. and Salt Lake City rank among the lowest-cost areas for data centers while Silicon Valley and southern California as well as Boston and northern New Jersey represent the most expensive areas.
But Lynch noted that non-monetary factors such as proximity to a headquarters location, fiber density and environmental and other risk factors also drive data center site-selection decisions.
“The large price differential between high- and low-cost markets suggests that prudent site selection efforts should not overlook the land acquisition component,” said CBRE Director of Research and Analysis Jessica Ostermick. “In addition, while labor costs rank relatively low among our factors, it is important to also consider the availability of engineering staff and construction labor–particularly in less-developed and low-cost markets where the available talent pool is limited.”
CBRE Director of Data Center Research Jeff West observed a positive relationship between the size of a market’s population and its cost. “The more populous markets tend to fall in the moderate- or high-cost segments,” he said. “In fact, all of the moderate- and high-cost markets have populations greater than 1 million.”
