Go West, Young Data Center

Banks' big buzzword in data center location these days is "buffer acreage," as in lots and lots of empty land surrounding your facility, says John Boyd, of location specialists The Boyd Company. But there isn't much of that to be found in the Northeast. "As the economy improves, no doubt there will be a migration of data centers towards smaller markets in the Midwest...and we're very busy taking this industry out of Florida."

Boyd took a hard look at what it costs to open data centers in different cities and geographies around the country, comparing what it costs to build a 125,000 square foot data security center employing 125 people in each city. The most expensive? Probably no surprise: New York City, with annual operating costs topping $26 million. The cheapest was Sioux Falls, SD, where annual operating costs were just $11 million. Comparing to New York to Sioux Falls unearths differentials in all the component categories, from labor costs that are about 25 percent higher to property and sales tax costs that are more than 500 percent higher.

And while Boyd acknowledges there aren't a lot of new data centers being built this year, he says the site selection business is ramping up as banks look to cut costs and increase capacity and comply with regulations-from data and processing intensive risk-management mandates to SEC rules on rapid recovery. "American Express is scouting small markets for a major data center, and Visa is planning to do something pretty dramatic in a small market soon," he says. "It seems more and more we're investigating small markets that would go unrecognized."

This article can also be found at AmericanBanker.com.

Rebecca Sausner is editor-in-chief at Bank Technology News.

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