Uncovering the Top Benefits of Attracting a Data Center to Your Community
4 Sep 2023
News, Business Attraction
Data Centers have been on the target industry list for economic developers throughout the country, but what are the benefits of having one in a community? In today's digital age, data centers have become the backbone of modern economies. The presence of a local data center can provide other businesses with confidence in their ability to store, manage, and access vast amounts of data - essential for modern business operations. “Economic developers are promoting nearby data centers as part of their pitch to site selectors and larger corporations,” said Aaron Brossoit, CEO of Golden Shovel Agency. “This is an often unseen benefit of recruiting data centers to a community.”
What are the top benefits of attracting a data center, especially when land may be scarce and economic developers are simultaneously recruiting manufacturing investment?
Golden Shovel Agency interviewed technology leaders and economic developers with data centers in their communities. Here are some of the benefits they identified to recruiting a data center to your community.
1. Job Creation
One of the most tangible economic benefits of a data center is job creation. The construction phase involves heavy capital investment and results in the creation of significant jobs for people in the trades and general construction. Technology companies, like Google, prioritize hiring small businesses to do these jobs. The project can be catalytic for helping small businesses grow.
Once the construction project is complete, operating a data center requires a skilled workforce, ranging from maintenance technicians to data analysts and IT specialists. Local communities benefit from a boost in employment opportunities, and since these jobs pay well, disposable income also goes up, something that can create secondary jobs.
2. Capital Investment
Data centers represent substantial capital investments, with costs often running into billions of dollars. For example, when Facebook came to the Omaha region, their data center resulted in over $1.6 billion in investment in order to build and run a 2.6 million-square-foot data center.
3. Increased Tax Revenue
Data centers contribute to increased tax revenue for local governments, typically through real and personal property taxes. Since equipment needs to be frequently replaced, the property taxes levied on data center infrastructure and equipment can generate substantial income for communities and provide much-needed funds for public services such as schools, healthcare, and emergency services
4. Infrastructure Development
To accommodate the needs of data centers, communities often need to invest in their infrastructure, including roads, utilities, and telecommunication networks, some of which can be paid for through federal funding. The presence of a data center can act as a catalyst for infrastructure development and upgrades, creating opportunities for attracting additional businesses in that area.
5. Attracting Tech Companies and Related Industries
Companies often prefer to locate their operations near data centers to reduce latency and enhance data access speeds. “Economic developers should leverage this to their advantage in order to build a tech cluster,” said Brossoit. This clustering effect can create a thriving tech ecosystem, leading to further economic diversification and job opportunities.
6. Skills and Knowledge Transfer to Build a Stronger Talent Ecosystem
Data centers require highly skilled workers to manage and operate their complex systems. Companies like Google encourage their workers to be involved in the community, introducing students to data center and technology careers and assisting in workforce development. This commitment to transferring skills and knowledge is powerful and can inspire the next generation of community talent.
“We know how important representation is. If children don’t know anyone working in the tech sector, they are unlikely to consider this career as a real possibility for themselves. If we want students to choose career paths that could lead to data center work, they need to meet more people working for these companies,” said Bethany Quinn, VP Strategy & Content Development for Golden Shovel Agency. “Google is doing a good job of outreach through employee engagement and is a model for other companies to follow.”
The Benefits to Attracting a Data Center far Exceed Traditional Job Creation & Capital Investment
Data centers are more than just technology hubs; they are catalysts for economic growth and development in the communities where they operate. From job creation and increased tax revenue to infrastructure development and attracting tech companies, the economic benefits of having a data center are substantial and far-reaching. Communities that recognize the value of data centers and invest in an attraction strategy can reap immediate benefits while laying the foundation for a future tech and business ecosystem that will meet the needs of the next generation of residents.