22 Mar 2007

22 Mar 2007

The New Data Center Boom


Category: data center site selection

Across the country, data center development is booming. Companies, including major players like Microsoft and Google, are buying up acres of land with the intent of building new data centers.

This rapid growth is, at least in part, spurred by the requirements of the Sarbanes-Oxley Act and the Health Insurance Portability & Accountability Act (HIPAA), which call for better handling and storage of data. Companies are also responding to the nationwide push to establish energy efficient data centers. In order to accommodate the state-of-the-art, next generation data centers, companies simply need more space than their current facilities can provide.

Data Center Site Selection

For companies seeking to develop a new data center facility, high-quality site selection is of the utmost importance. By choosing a site location wisely, companies can save both time and money, while achieving scalability, flexibility and high availability.

Choosing a site that minimizes the natural and man made threats to continuous operation is the first step in provisioning a new data center. There are many factors to consider, including:

  • Natural Hazard Threats
  • Physical Location Threats
  • Terrorist Activity Threats
  • Environmental Contamination Threats
  • Site Accessibility
  • Amenities Access

It is interesting to note that the priority level of these factors is highly changeable. For instance, a decade ago it would have been more common for companies to seek site locations that with close proximity to major cities and airports. However, in the wake of September 11th, data centers are more likely to spring up in smaller cities, reducing the likelihood of damage from terrorist attacks, but most especially in those areas of the country that have the lowest operation costs including utility rates, land acquisition costs, labor rates, tax rates, and cost-of-living expenses.

To help navigate the complex process of site selection, many companies employ data center consultants for assistance in selecting an appropriate geography on which to locate their data center. Site selection services are the optimal way to ensure your mission critical facility is set up in both a location and a building that can support constant availability.

Comments (7)

  1. John Rath on 22nd Mar 2007

    I usually hate it when the following is said in an argument, but to me, it really applies here….. it depends.

    It depends on the size of the company. The majority, seemingly, will almost always locate close to their headquarters or near a primary office location. It’s a comfort zone thing….or something. The SMB market will stay within 100 miles or so of their office. The large (perhaps fortune 200 companies) are the only ones that will throw these factors to the wind and locate based on reasons that Peter lists.

    Price always will play a major factor — there is no doubt about that. Weather (to me) plays into the equation simply because it adds to the price of the facility, and then ultimately, to the customer. The data center I work at does not have to be seismically braced, because we will never experience an earthquake. The fewer things that you have to prepare for in the design of your facility, the less it will cost.

    Terrorist threat can play into the equation more than just as a facility threat. If your data center is in a large city, what if the terrorist activity took out all of the data center’s workforce?

    I could go on and on, but I am actually building a site selection list of my own (growing quite large) that I will publish sometime soon.

    After Microsoft and others use up all the power on the Texas grid maybe companies will look somewhere else to start building. 🙂

    Nice article Peter!

    -John Rath

  2. Anthony Cresap on 4th Jul 2007

    All very interesting information. An industry that will be evolving for some time. It appears companies are all taking somewhat different approaches. There seems to be no “right” or “wrong” way to secure the right site. I say it cannot be that much different from most other land uses, save for a few differences dictated by the technology. It really boils down to what makes for good real estate development ROI and good electrical engineering at the same time.

    Check me out at http://acresap.blogspot.com/

    Cheers, TC

  3. Anonymous on 17th Jun 2008

    Actually, the first step is not to choose a site that minimizes threat, both naturally & man made. Yes it is an important factor, you wouldnt want to set up downtown SF or NY, or next to the White House, but its by far not the first step. The first point in selecting a Data Center Site Location is to first realize what the goal is to be accomplished because a Data Center is a Data Center, not a Wal-Mart where customers and lots of housing is needed close by. 1) Is this a business where income is key? What scope of term are we looking at? 10 years, 50 years? (that determines some of the real estate factors, such as do we buy, or do we lease?) 2) What are the Risks depending on the chosen location? This is not a business where income, tourism, etc. is paramount, so “location,location,location” the way that we typically know it is not priority. Cost of acquisition and operation are. This is actually deep because on the surface, the real estate may be cheap to acquire or lease, depending on the scope, but you may pay out more in the long run in taxes, utilities, environmental hazards, etc. Prime example, in Stockton, CA real estate values have are down by somewhere in the neighborhood of 50% in the last 2 years. But the taxes and cost of operation & utilities will kill you. You may be able to acquire land for $5k per acre in the deserts of NM, but I dont think there are a lot of IT specialists residing in the area, and the cost of cooling would certainly be an issue. Which brings up alternate sources of energy such as solar power. The sun shines alot more in AK, KY, or TX than it does in Seattle. 2) Something I haven’t seen anyone talk about yet, “Risk of Liability”. Setting up next to a PG&E plant may risk future “Erin Brokovich” issues. Setting up in Minot, ND you could end up with mountains of legal battles & workers comp cases because the employees keep falling on the frozen steps trying to get in the front door each morning.

    Also, Threat and cost of operation are 2 different things, lets not get those confused. Threats are terrorism, and natural disasters such as tornadoes, floods, earthquakes. Cost of operation is cooling, heating, electricity, etc.

    The weather, or ‘climate’ if you will, is one of the top key elements on cost effectiveness, or ‘saving money’ to both the business and ultimately the customers. Accessibility is not paramount if it is set up correctly. The data center should have adequate trained staffing and backup equipment on hand, period. Microsoft HQ doesn’t need to be right next door. Customers dont need to be close by. Why would they?

    I say, rule of thumb, find a place where weather is consistent and sunny, prob between 50-90 degrees consistently. Avoid the far north for cold & accessibility reasons,(& the opposite for the far south). Avoid big cities, tornado alley, the coasts. Avoid California (not enough room to list all the reasons), and target low cost of living areas based on those results. Start there, then narrow it down by other things such as crime rate, accessibility to resources & highways (for equipment purposes, etc.)

  4. Pete Sacco on 17th Jun 2008

    Thanks for all of the excellent comments to my original post.

    There is no doubt that costs, both capital and operations, always play a key role in any site selection criteria.

    However, I have decided it is fruitless to try to rank one criteria over another. I have come to learn that data center site selection is a matter of perspective.

    Just the other day I had executives from a $100B multi-national conglomerate visiting PTS. Their #1 criteria was minimization of earthquake exposure. In fact, land cost was a distant 5th!

    Keep them coming.

    Pete Sacco
    PTS Data Center Solutions, Inc.

  5. a2m2p5 on 9th Oct 2008

    Q – My current employer is looking to consider a warehouse they own and build part of it out to facilitate a data center.
    Is there a way to estimate how much the data center build out will cost…is there any cost per sq. ft or per 2×2 raised floor tile?


  6. PTSacco on 9th Oct 2008

    Data center and computer room projects cannot be priced on a dollar per square foot basis like commercial real estate. The cost per IT space is only one component of the overall cost variable. The other piece, is the cost per kW of the power and cooling (support) infrastructure. The Uptime Institute has published a pretty good white paper on the subject, “Dollars per kW plus Dollars per Square Foot Is a Better Data Center Cost Model than Dollars per Square Foot Alone”. It can be downloaded at, http://uptimeinstitute.org/content/view/22/56/.
    In any case, PTS offers for fee consulting services to help our clients narrow the scope of their project by understanding cost impact of their decisions.
    I hope this helped.
    -Pete Sacco

  7. a2m2p5 on 15th Oct 2008

    Mr. Sacco,

    I greatly appreciate your reply and insight.


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