Over the past 20 years, the Midwest has become a popular data center region.
There are several reasons for this phenomenon, but the most important of these are the following:
- Low energy costs
- Easy access
- Low to no risk
- Potential growth
- A large pool of talent
So if you’re looking into Kansas City colocation, like the rest of the region, you can expect it to be cost-effective.
Kansas City, in particular, was ranked #2 in the country last year for enterprise data center operating affordability.
The Midwest is Competitive
It’s difficult to compare colocation rates as they depend on many variables, including the client’s specific needs. In a general sense, the Midwest is highly attractive when compared to the rest of the country.
The Midwest has essentially changed the game because of three major factors:
- Legislation
- Taxes
- Weather
New Legislation
After one of the worst recessions in history, lawmakers in the Midwest realized that tax incentives can significantly impact state revenue. By offering benefits for new investments, you can ultimately lower unemployment and grow the tax base. Further, by having an additional tax base, there won’t be any reason for the government to increase taxes.
This kind of legislation varies from state to state. Some data centers must hire a certain number of employees at a predetermined rate.
Further, some states require a certain size regarding square footage. Others require certain NAIC or SIC codes to be eligible for the exemptions.
Structured Taxes
The State of Missouri recently approved tax incentives for data centers. The requirements are more than reasonable, requiring a $25 million investment and 10 jobs for a new data center. Further, the expansion will be at a rate of $5 million and five jobs. This initiative will not only drive new business, but it will also have a significant impact on the job market.
Taxes significantly influence building decisions, so you can expect significant growth in Missouri. Further, the state is also filled with underground sites making it easy to set up a bunker-style data center.
Wintery Weather
The northern Midwest region is more suitable for colocation than the southern states. The north is colder, so it provides the direct benefit of using the free cool air from outside to cool down multiple servers.
As the size of the overall equipment density needed for data centers grows, colder locations become the cost-effective option. Further, data center economics has changed, with the utility costs outweighing actual hardware costs.
Kansas City is located further south, so one can assume that the options offered by states further up north would be more economical. Although legislation is changing across the region to benefit data centers, Kansas City colocation still has to deal with the warm temperatures of the south.
How was your experience with data centers in the Midwest? Let us know your thoughts in the Comments box below.
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