The Billion Dollar Data Centers

Maiden. Council Bluffs. Boydton. Bluffdale. And now Lenoir and perhaps Altoona. These are the cities you’d never heard of that have become the homes of billion-dollar server farms.

Your iTunes downloads, Facebook posts and YouTube videos travel through these small rural communities en route to your desktop and mobile device. The growth of the digital economy is not just reshaping how we use the Internet, but creating a new data center geography in which armadas of servers now reside in suburbs or rural towns, often outnumbering the humans in these communities.

The economics of hyper-scale computing favor cheap land and cheap electricity, which are unavailable in many of the historic Internet hubs, which are located near major cities. This has created an unusual side effect – major data centers are transforming the economies of small towns around the U.S., placing them on the front line of the race to build out the infrastructure that runs the Internet.

A handful of these towns have received concentrated investment of more than $1 billion on a campus of server farms. Google, Apple, Microsoft have each deployed these billion-dollar data centers in little-known towns, and Facebook is not far behind.

Symbols of the New Economy

These projects have been hailed by governors and economic development officials, who see data centers operated by Internet titans as symbols of the new economy. Huge server farms are hailed as saviors of rural communities, which have often been abandoned by the factories that were once the lifeblood of the local economy.

Yet data centers don’t fit neatly into the traditional model of economic development engines. They have been reliable generators of hundreds of construction jobs, which are welcome but temporary. But the advanced level of automation at work in data centers translates into a limited number of permanent full-time jobs, and much of the investment arrives in the form of servers, generators and UPS equipment.

Here’s a look at the billion-dollar data centers:

• Maiden, North Carolina – This town of 3,300 people in Catawba County is home to the iDataCenter, Apple’s first company-built data center facility. The campus began with a 500,000 square foot main building and a 30,000 square foot “tactical” data center next store. Apple has since added two massive solar arrays and a “fuel cell farm” featuring Bloom Energy Servers fueled by gas from a nearby landfill.
• Council Bluffs, Iowa – Google kicked off the data center craze in Iowa in 2007 when it announced plans to invest $600 million in a new facility in this town of 60,000, located just across the Missouri Rover from Omaha . Google clearly loves the location, as three successive rounds of expansion have raised its investment in Council Bluffs to more than $1.5 billion.
• Boydton, Virginia – With its latest expansion, Microsoft’s investment in its data center campus in southern Virginia has reached $997 million. Microsoft has built more than 316,000 square feet of data center space in Boydton, a town in Mecklenberg County with just 431 residents as of the 2010 census. The company plans two more phases at the data center, a hybrid facility that includes traditional raised-floor space as well as IT-PAC modules.
• Bluffdale, Utah – The U.S. government is also in the mega-data center business with its $1 billion-plus facility for the National Security Agency (NSA). The secretive project includes a 30-megawatt first phase featuring 100,000 square feet of data center space and 900,00 square feet for technical support and administrative space. Bluffdale, a suburb of Salt Lake City, has about 7,500 residents.
• Lenoir, North Carolina – This town in Caldwell County in western North Carolina is home to 18,000 residents and more than 50,000 servers. Google opened a $600 million data center in 2007, and this month expanded its investment to more than $1.2 billion.

There are two other examples of data center clusters that have transformed small rural communities:

• Quincy, Washington: This town of 5,000 residents in central Washington state is home to data centers for Microsoft, Yahoo, Sabey, Dell, Intuit and Vantage, which likely total more than $1 billion in investment. The server farms are attracted by the extraordinarily cheap hydro-electric power from dams on the Columbia River , and a climate ideal for using fresh air to cool servers.
• Prineville, Oregon – Facebook put this central Oregon town of 10,000 residents on the map when it picked Prineville as the location for tis first company-built data center. Apple has also decided to build a major server farm in Prineville. Between the two companies, Prineville may eventually one McDonald’s and six buildings filled with servers housing the world’s music, photos and status updates.

These locations all offer abundant land for massive facilities that can house of tens of thousand of servers, and the electricity to power these armadas of servers. They offer tax incentives that make it cheaper for data center operators to buy their land and servers. In many cases, they also offer the opportunity to cool servers using outside air instead of power-hungry chillers, slashing the cost of operating the data center.

The Economic Impact of a Data Center

What have these data center developments meant for these communities? Some of the best data comes from Quincy, Washington, where construction of Yahoo and Microsoft data centers boosted property tax values in the city of Quincy from $260 million in 2006 to $764 million in 2009. As a result, property tax collections grew by more than $1.4 million over the period, while school taxes in Quincy grew by $1.6 million.