Data center real estate investment trusts (REITs) will continue to thrive as more cloud services are required. Areas in western North Carolina are sleeping giants in terms of where to put a data center. It's a great fit for tech companies and the community.
Data center REITs have returned more than 100 percent over the last two years. Crown Castle recently purchased Lightower for one of the highest per fiber mile prices ever. What is driving the growth? Isn’t everyone using the cloud?
The data center is still the safest place to store and process your data. The data center is where the cloud resides. Cross connect capabilities like connections to financial markets, exchanges, Bloomberg, Reuters, and even cloud providers like AWS and Azure make data centers more functional for companies looking to take advantage of their geography.
Geography impacts latency as light can only travel between two distances within a set span of time governed by physics. Tony Soprano said it best when talking about Real Estate to his son Anthony Junior, “Buy land AJ, ‘cause God ain’t making any more of it.” That couldn’t be more true about data centers. Areas like Ashburn, Virginia, are data center hot spots because of low taxes, bandwidth availability, and proximity to Washington, D.C. and New York.
Appalachian areas like western North Carolina, South Carolina and Georgia are a great fit for data centers. There’s ton of land available in areas protected by mother nature much like Denver where key infrastructure lies. Power is easily accessible but more bandwidth needs to be built out to support the growth. There are good people looking for work with skills.
For companies looking for large amounts of data center space, new construction of your own facility makes sense. Local government is helpful and fiber runs are low cost in comparison to the city. In terms of strategy, keeping data geographically diverse from your center of business operations makes sense and the jobs are welcome. Facebook’s facility in Forest City, North Carolina, resulted in 4,700 new jobs across the state while generating $680 million in economic output.
Counties like Polk and Madison County are close to great higher education like University of North Carolina, Mars Hill University, AB-Tech, Gardner Webb University, and the University of Western Carolina. The textile and furniture industry left a huge employment and skills gap. Not only were jobs outsourced, technology made it easier to manufacture both textiles and furniture. The vacuum left a logical win-win situation for Wall Street and Main Street. With low taxes, low build-out costs, skilled and trainable labor, along with pro-economic growth local governments
To put things into perspective, a 10×10 cage in a decent facility in New Jersey with power and bandwidth will run you $20,000 per month easily. That’s $1.2 million over 5 years on power, ping and space. With a little bit of sweat equity and planning, that money can be put to good use by companies looking for more data center space while being greatly appreciated by the locals.
