Iowa banking on data storage demand
Facebook, Microsoft and Google data centers expanding, moving to Iowa
In the span of three months, two tech giants committed to investing huge amounts of money in Iowa. They both want to build the same thing — a data center.
In April, Facebook said it would build a $1 billion data center in Altoona. Then in June, Microsoft announced it would expand its West Des Moines data center, investing $677 million in the project and pushing its total investment past $1 billion.
“The expansion of the West Des Moines data center is a win-win, bringing both new jobs to Iowa while supporting the growing demand for Microsoft’s cloud services," said Christian Belady, Data Center Services general manager at Microsoft, at the time of the announcement. "The new facility is designed to provide fast and reliable services to customers in the region and features our latest efficient data center thinking,”
This news came on the heel of Google's announcement in 2012 that it would expand its Council Bluffs's data center. The company chose Iowa in 2007 for the facility's home and its projects also pass the billion-dollar mark.
These high-profile projects are getting Iowa noticed. The July edition of Site Selection Magazine, an internationally circulated business publication covering corporate real estate and economic development, even features Iowa in an article about data centers.
"The state legislature saw this was an important and growing industry," said Debi Durham, director of the Iowa Economic Development Authority. "They took a step back and decided to create a culture that would accelerate and encourage growth in data centers."
So what is about Iowa that makes it so appealing to companies searching for the perfect location to build their data centers?
In 2009, the state passed legislation with a series of incentives it hoped would help lure data centers. Depending on the size of investment, data centers are eligible for 50 or 100 percent refund on sales and use tax for electricity, power infrastructure equipment, computer purchases, temperature-control equipment, cool tower equipment and racking systems — all vital components to operate a data center.
But tax incentives aren't the only thing bringing data centers here.
The state's relatively safe location, major Interstate systems and access to renewable energy make it a top choice, said Bruce Lehrman, CEO of Involta, which builds, owns and operates seven data centers in five secondary markets, including Marion.
Companies don't have to worry about hurricanes or earthquakes, he said. And while the state does have to deal with tornadoes, it's not in tornado alley.
There is also an abundance of renewable energy. Iowa leads the country in wind power generation, which produced about 24.5 percent of the state's energy needs in 2012
That percentage will only grow. In May, MidAmerican Energy Co. announced it would invest $1.9 billion in Iowa wind energy, building 656 wind turbines that will generate up to 1,050 megawatts of power by the end of 2015.
A growing need
Lehrman cited an IBM statistic that 90 percent of all data has been created in the last two years. This explosion of information has companies of all shapes and sizes trying to figure out what do with it and where to store it, he said.
The federal government is finishing construction of an enormous data center in Utah. The 24o-acre site will be operated by the National Security Agency and have 100,000 square feet of computer space.
Hospitals and health-care companies are looking for space to store their medical data, which is another rapidly growing sector.
"Everyone is using data center services somewhere," Lehrman said, even if they are just checking their email. "That data has to be stored on a server somewhere."
That's where Lehrman comes in. His third-party data centers offer security and space to companies unable to build their own data centers, which require large amounts of power and 24/7 attention.
Inside Lehrman's facilities are hundreds of cabinets filled with server racks that store information. He powers the facilities through two substations and multiple generators to make sure the center is never without power and clients always have access to their data.
"We use as much power as a small town," he said.
The servers sit under at least a foot of concrete to protect that data, but Lehrman noted cyber attacks are a more serious threat than physical ones.
"We're bombarded on a daily basis by thousands and thousands of attacks," he said. "A lot of it is managed through automatic systems."
As the need for data storage space continues to grow, Google, Microsoft and Facebook's presence in Iowa will be a big help in drawing more business to the state, especially in the technology industry.
"The work force that comes along with these centers and strong brands make people rethink Iowa," economic director Durham said.
Lehrman agreed. These companies give Iowa a tremendous amount of credibility, such as when he's in Chicago talking with companies about moving their IT infastructure into his facilities.
"It really does help," Lehrman said, when doing business in a state such as Iowa that's not necessarily the first place people think of when it comes to technology.
Big data centers also are a plus when it comes to work force recruitment.
Data centers may not produce a ton of jobs, but they do produce high-paying jobs with internationally recognized companies in addition to large construction projects and logistical needs."We have to grow our work force, and this helps attract IT workers," Durham said. "It's a major help when recruiting talent."