North Carolina’s Emerging Data Center Cluster

Community and Economic Development – Blog by UNC School of Government

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North Carolina’s Emerging Data Center Cluster

By Jonathan Morgan

Published January 4, 2011

Jonathan Morgan is a School of Government faculty member.

As a new year begins, economic developers and public officials in North Carolina must feel pretty good about the state’s prospects in 2011 for building on its recent success in attracting several major data center facilities.  In a few short years, North Carolina has emerged as a major contender for these types of facilities.For example, according to one consultant, the Greensboro region may be the second best location in the world for data centers, behind Iceland but ahead of Shanghai, Latvia, and Mumbai.  In the western part of the state the region known as the “Highway 321 Data Corridor” is gaining prominence and seeing a boon in data center activity.  To capitalize on this opportunity, five counties—Alexander, Burke, Caldwell, Catawba, and Iredell—have formed a multi-jurisdictional initiative to ensure that new projects consider locating in “North Carolina’s Data Center Corridor”.

As technology companies prepare and position themselves to support new ways of processing and using data via the Internet, demand for suitable data center locations is expected to increase significantly in the coming years.  Cloud computing as a way to run and access extensive web-based applications stored on remote servers, in particular, is a major trend that will fuel these types of projects.   By one estimate, the market for cloud computing services will grow from $16.2 billion in 2008 to $42 billion in 2012.

Let’s briefly recap some of the recent data center projects in North Carolina in order to highlight the potential economic development impacts of these facilities:

• Google opened a $600 million data center in Lenoir (Caldwell County) in May of 2008 with 210 employees.
• Apple is building a $1 billion, 500,000 square foot facility in Maiden (Catawba County) that is expected to create 50 full-time positions on site.
• American Express is constructing a primary data center in Guilford County which is expected to cost $400 million and employ up to 150 workers when it opens in 2012.
• Facebook will build a $450 million facility that employs 42 people in Rutherford County.
• Wipro Infocrossing has announced plans for a $75 million data center in Cleveland County that will create 17 jobs.

Technology companies in the Research Triangle region, such as IBM and SAS, have also made major investments in new cloud computing facilities over the last few years.  This is not surprising given the fact that those companies already have existing operations in the region.  But in other parts of the state, these data center facilities represent a significant boost to the economies of regions that have been struggling to recover from the effects of industrial restructuring and make the transition to new types of economic activity.  While the job numbers are relatively low, the initial direct capital investment required is substantial and will significantly expand the local tax base in most instances.  Additional economic and fiscal impacts can be expected from the influx of supplier firms and contractors that are needed to support these large facilities and the many computers servers and other equipment they house.

The Piedmont Triad region around Greensboro and the Highway 321 Data Corridor between Catawba and Caldwell counties are prime spots for data centers due to the presence of reliable and affordable electric power sources, an extensive telecommunications infrastructure, an available workforce, and a low risk of natural disasters.  State and local incentives have played a role in some of the projects, but not all of them.  The trend in data center locations is one that bodes well for North Carolina in the near term.  Let’s see if the momentum continues in 2011.