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March 2010

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From Site Selection magazine, March 2010

Data center site selection for
large corporations wanting
their own facilities comes
down to several basic factors

Designed to support new compute models like cloud computing, IBM’s new 60,000-sq.-ft. (5,574-sq.-m.) Leadership Data Center in Research Triangle Park, N.C., opened in early February 2010, and requires only half the energy required of a similar facility its size. The data center will ultimately total 100,000 sq. ft. (9,290 sq. m.) and is part of a $362-million investment in North Carolina.
Photos courtesy of IBM

T5 Partners
Photo courtesy of IBM

any would expect a reasonable place to start when considering a site for a potential data center would be the available land and a building.

That, however, would be a critical mistake.

The search begins with a corporation's need for geographical diversity preferences and disaster avoidance.

The second thing to consider is where the cost of power will be inexpensive, robust and reliable.

Next, a company should understand where state corporate income taxes will be most favorable with respect to their operations planned for the data center.

Third, state and local sales taxes levied on millions of dollars worth of servers purchased and replaced every three to five years, quickly adds up. State and local sales taxes can vary greatly from location to location and are a major component of the total operating cost of a data center. Municipalities where taxes are low or incentives garnered allow for abatement or rebates on sales taxes are important to consider.

Personal property taxes on the millions of dollars worth of equipment are generally the next largest operating cost. Having a lesser impact on total operating cost is real property tax on the building. Both of these vary from municipality to municipality.

Lastly in site selection, it's about infrastructure, pure and simple. How much and what type of power? Is the power transmission-fed power? Will there be an onsite substation? What is fiber availability and bandwidth capacity? What about the sources and capacities of water for cooling purposes? 

The importance of access to the company's other facilities    and/or customers varies depending on the function of the data center to be built.

Data In Context

The development of data centers is a growth area, there is no question, not just in the United States, but globally.

Most state-of-the-art data centers are operating at capacity following a slowdown after the tech boom earlier in the decade. Companies have been slow to spend on infrastructure upgrades, but the demand has grown steadily. Demand is projected to outpace supply for the next 3-5 years and this in turn will cause wholesale data center rates, and colocation rates, to see significant price increases.

Studies have shown the number of people using the Internet is up 50 percent over the last five years, and the number of people uploading large-format files to the Internet has been steadily climbing ever since YouTube caused a sensation in 2006. Users want their data, they want it fast and they want it high quality.

The combination of volume growth and price increases in the data center market has driven industry revenue from $1.5 billion in 2006 to a projected $3.2 billion in 2010. This is just for wholesale and colocation data centers.  New construction for large-enterprise data centers is currently estimated at $5-$6 billion in 2010 and expected to double to $10-$12 billion by 2015.

This type of explosive growth is the reason a company like T5 Partners is critical. With more than 15 years experience specifically in data centers, we know what to look for and what areas meet the needs now and will meet those needs in the future. The team has been involved in the site selection, leasing, design, and project management and delivery of 100 mission critical facilities containing approximately 10.5 million square feet of data and contact center space.

The convergence of these critical drivers will direct potential builders to the appropriate land, but that site is not without inherent risks.

Another key factor is the risk associated with the site. The company and their customers will be dependent on that center remaining up and running.

T5 Partners has been advising corporations on where to locate data centers for many years. Now that T5 is investing in and developing its own sites, T5 has decided to place its capital in North Carolina. T5's first Data Center Parks are in Metro Charlotte about 25 minutes from the Charlotte Airport. The Charlotte sites offer the big infrastructure, low cost power, and incentives.

For more information on T5, go to

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