4 Factors Driving Data Center Activity in the Southeast

As we digitalize our lives and more companies convert to cloud-based systems, the demand for physical space to store and protect data skyrockets. Development of data centers to house telecommunications and IT infrastructure was trending pre-COVID-19 and has been exponentially accelerated by the pandemic and transition to hybrid work environments.

The market to serve this unmet demand is both expensive and competitive, and developers need to move quickly to stay ahead. Identifying a suitable site with enough space, the right zoning, and proximity to necessary utilities can be challenging. However, the Southeast is shaping up to provide prime data center development opportunities. It’s an expanding region for data center owners and operators.

I recently joined a panel of industry experts at Bisnow’s DICE Southeast conference to discuss what makes the region desirable for data center development.

1. Geography

• Atlanta in particular is geographically centered in the Southeast. Through its existing fiber optic infrastructure, it acts as a hub and provides connectivity to the many other growing communities across the region.

• Extreme and unpredictable weather can be a challenge for data centers. Loss of power affects servers and critical cooling infrastructure. Weather patterns across the southeastern U.S. in general are relatively mild, lessening the risk of outages or damage from natural disasters. Even when extreme weather does hit the Southeast, it can be forecasted and prepared for as opposed to more spontaneous impacts on the West Coast. Coastal locations close to the water are also being designed to mitigate flood and hurricane risks.

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2. Infrastructure

• Electric power is relatively affordable and reliable, which is critical for a data center’s success. Industry experts recommend owners work with utility providers to negotiate the lowest rates possible so the savings can be passed on to tenants.

Did you know? Large sites often require their own substation to deliver current, giving the end-user more control, and enabling faster market delivery.

• Existing connectivity throughout the Southeast is strong. Fiber lines are often already available along the region’s railways. The Southeast is also the gateway to connect directly to the Caribbean and South America. Proximity to existing infrastructure and the option to connect internally substantially boosts the region’s development potential.
• Florida’s east coast offers newer, underground utilities. Data centers located here are positioned to be more reliable and resilient to storms than areas serviced by above ground infrastructure.

3. Development Climate

• In general, cities throughout the Southeast are receptive to data center development. Engaging in open, up-front conversations with municipal stakeholders and local economic development groups is an effective way to begin the development process.

Tip for Developers: Since the type of use is new to many municipalities, local codes may lack clarity on data center development. Explaining data center operations to the community and local agencies can help to move the project forward. While data centers can be a significant source of tax revenue, they do not increase traffic or overload the schools. Engage a civil engineering consultant and land use attorney who can help determine the project’s zoning needs and keep it moving.

• Though costs are rising nationwide, compared to other areas of the country, construction and labor costs throughout the Southeast are relatively low, and no formal unions exist like in other major cities.
• Though variable, some states and municipalities are beginning to offer tax incentives for the number of jobs created, equipment used, or money invested.

4. Demographics

• People are migrating to the Southeast from all parts of the country, and the region is seeing record population growth. More people means more data connectivity, creating opportunity for increased data center growth.
• Centralized hubs are no longer sufficient, either. Data centers need to move into more localized markets to support the increased demand for connectivity.

Through Bohler’s extensive experience in the Loudoun County data center market, we understand the speed-to-market, utility, and space requirements for desirable facilities. Click here for more information on how to evaluate a site for data center development, and what tools are available to help developers move data center projects forward faster.

Considering the Southeast for your next data center development?