Speed to market can be dramatically increased and costs of construction and operation can be greatly reduced by understanding the locale.
Here’s a simple truth: When it comes to data center location, “where” is as important as “what.” Where you locate your data center is as critical to its successful, cost-effective operation as any high-tech operational consideration, touching on everything from local business acceptance and speed to market to staffing and both construction and downstream costs. For this reason, a business-friendly environment ranked high in Verity Commercial’s recent ranking of essential planning considerations.
Before any other consideration, the business focus of the locale has to be first. As we stated previously, no one wants the annoyance–not to mention the bad press–of picketers outside of construction fences shouting, “Not in my backyard!”
But the business climate goes deeper than that, and there are three prime considerations that should be included in the site-selection process: The efficiency of the local government and economic development agency (if indeed there is one); the incentives being offered for business growth; and the understanding of the local Authorities Having Jurisdiction (AHJ) and your relationship with them.
Taking the first question into consideration, are the local governing authorities capable of fast-tracking projects that promise both tax revenues and jobs? Or will your project get lost in a sea of red tape? Talk with other local business leaders–those with data centers and others–to get a tight bead on the environment you’re entering, including such issues as permitting, zoning and working with the local utilities.
Now for the incentives question. You’d be wise not to put all of your site-selection eggs into this basket. As the Loudoun County, VA, Department of Economic Development states on its website, “No amount of incentive can make a bad location good.”
There are many drivers behind the package a particular state or municipality will offer, whether it’s local jobs, tax revenue increases or city revitalization. Whatever their motivation, early and in-depth conversations between your general contractor and the local representatives will point your decision toward or away from that locale.
Returning to the Loudoun County EDC as a sample, there are a range of incentives that can ease the transition from concept to operational efficiency. These include new jobs programs, sales and use tax exemptions and a Fast-Track Commercial Incentive Program. This program is “designed to improve plan-review timelines and direct communication with key decision makers.” A web search for the EDC of the area you’re targeting is a great first step to making your locational decision.
But keep in mind that identifying incentives and making apples-to-apples regional comparisons is trickier than it might appear. “There can be an immense learning curve in navigating the world of economic development incentives and the value of the incentive,” states Area Development magazine. Policies are constantly shifting based on such issues as investment thresholds, the number of jobs being created and the type of business. “For those involved in the process on an infrequent basis, the wheel is essentially reinvented each time the process begins.”
A common incentive revolves around staffing and training. There’s good news and bad news here, the latter being that data centers aren’t ongoing supporters of massive employment. The good news is that they represent complex construction processes that call for local labor, a rich source of income for the community, especially in this era of high single-digit joblessness.
Your development team should also possess a familiarity with the AHJ. This connection can be beneficial both for your understanding of what the locale is looking for and steps along the way that you’ll need to take to overcome potential hurdles. The AHJ includes many different parties, such as the fire marshall and the building code or health inspector. A development team familiar with the local AHJ, and their respective processes, can help lead to a predictable outcome.
As Site Selection magazine states, “Site visits and meetings with municipal officials, telecom/fiber and local utility providers, and Authorities Having Jurisdiction (AHJ) provide a level of insight that cannot be achieved through phone conversations, online maps or economic development promotional materials.” Despite this age of social distancing, an up-close and personal relationship with your AHJ remains the way to go.
It’s no wonder that, with an aggressive business-forward philosophy, our home base of Loudoun County ranks first in a recent list of top data center locations. (The ranking appears below.) As a result, the local fire marshall is now a seasoned pro, and he knows exactly what he’s looking at when he walks into a computer room. That’s the sort of understanding that makes for a seamless construction and approvals process. Our experience here and in projects around the country is to approach the AHJ as part of our team, not holding back but helping us over the finish line.
Given the expected rise in data centers (growth has been estimated at 11 percent annually over the next five years), it should come as no surprise that this is a commercial real estate sector with a ton of investment and development promise. One way to ensure a locale that’s friendly to what Site Selection calls the second wave of data center growth (the first occurring in the early 2000s), is to look to clusters. According to the magazine, the top 10 data center sites in the country–by size–are:
Of course, these are not the only areas that will lay out the welcome mat for your project. But this Top 10 possess a strong understanding of data center operations and requirements, key to a fast track or, at least, an efficient construction process.
By contrast, there are many other locales that are relatively less sophisticated on the subject of data centers. As a result, you may run up against such barriers as a local utility unable to forecast (let alone commit to) how quickly they can bring power to a piece of land. They may also be unequipped to do things such as rolling the cost of the infrastructure into the utility bill.
Clearly, understanding the local AHJ–in all of its nuances–provides the richest soil for the growth of your next data center project. Contact Verity Commercial to begin the process of identifying where your needs will take you.
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