Friday, June 14, 2024

Average U.S. Data Center Costs $270 Million over 10 Years: CBRE

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In the U.S., the average, 5-megawatt data center costs $270.1 million to operate over 10 years, according to a new report from CBRE Group, a Los Angeles-based commercial real estate firm. And as with all things IT-related, various factors can affect how big of a check enterprises wind up cutting for their technology investments.

“The ever-increasing need for data exchange, storage and security is broadening demand for data centers in the U.S., but one solution does not fit all,” remarked Pat Lynch, managing director of Data Center Solutions at CBRE, in a statement. “Capital and operating costs vary considerably by market, and non-monetary factors such as proximity to a headquarters location, fiber density and environmental and other risk factors can also drive enterprise site selection decisions.”

CBRE estimates that with the right site-selection strategy, organizations can more than halve their data center costs. The right blend of tax incentives along with careful consideration of land, construction, energy and staffing costs can slash up to 52.1 percent, or $140.9 million, off the 10-year price tag of running a data center.

Looking to shore up their local economies, most of the 30 enterprise data center markets studied by the company offer some form of tax incentives. The exemptions are Philadelphia, Southern California, Silicon Valley and Northern New Jersey, which don’t offer tax breaks.

Power costs can also significantly affect data center budgeting. “Power costs average 13.2 percent of the total project cost over the life of the project, but vary from 6.5 percent in Quincy, Washington, to 21.3 percent in Boston,” stated CBRE. Southern California and Silicon Valley also command high electricity rates, while Des Moines, Tulsa and Quincy, Wash. offer cheap power.

Regionally, there’s not much difference in a data center costs. In the western, central and eastern parts of the U.S., enterprises can expect to pay $271.5 million, $270.2 million and $268.7 million on average over 10 years, respectively.

Major population centers are the big determining factor in driving up costs.

Jeff West, director of data center research at CBRE, noted that his company’s “study also revealed a positive relationship between the size of a market’s population and its cost segment: the more populous markets tend to fall in the moderate- or high-cost segments. In fact, all of the moderate- and high-cost markets have populations greater than 1 million.”

Costs skyrocket to $276 million to $368.4 million for data centers in Boston, Chicago and Silicon Valley. On the low end of the spectrum, enterprises can expect to pay $227.5 million to $248.3 million by setting up shop in markets like Atlanta, Omaha and Portland, Ore.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

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