Why Data Center Users Choose Texas

Why data center users choose Texas
Why data center users choose Texas

Texas data centers have an enviable reputation for attracting high-tech energy and technology businesses. The Texas Enterprise Fund awards ‘deal-closing grants’ where a single local site is competing for a project with other out-of-state sites. The state also offers sales tax breaks for qualifying data centers. Furthermore, if you don’t qualify for this exemption, agreements limiting the appraised value of the data center’s property under Tax Code Chapter 313 exist to provide a secondary layer for tax savings for data centers.

No wonder the Lone Star State ties with California for the highest number of Fortune 500 company headquarters in the U.S. Its 346,000 millionaires, the second largest in the nation complete the picture of a stable, successful economy.

Moreover, the Governor’s University Research Initiative continues to attract Nobel laureates and other major researchers to its state public universities. Consequently, Texas hosts a wide spread of high-tech industries in its Silicon Valley and Silicon Prairie initiatives. Texas is one of the few states offering flexibility for negotiation and incentives at both state and local levels.

How a Central Location and a High-Tech Culture Attracts Data Centers

Texas has attracted more than its fair share of data centers since the industry began.  However, this has recently exceeded expectations as investors target its central U.S. location, skilled workforce, and tax incentives for data center customers.  

Michael Lahoud, writing for D Magazine ascribes this to impressive GDP, a strong economy, and robust, and reliable energy under the watchful eye of the Electric Reliability Council of Texas.. He predicts the state will be “well-positioned to win data center projects for years to come.”

Lining Up and Comparing the Top 4 Texas Data Center Destinations

The city of Austin, Live Music Capital of the World

Austin is in the south-eastern quadrant of Texas. It is the fastest-growing and 11th most populous city in the United States, promising a steady supply of Texas data center clients. Their storage providers find the low unemployment rate and high job growth attractive, and there are many new business opportunities among small startups and large companies.

Many data center operators choose sites in the 550-acre Met Business Park in the southeast of the City of Austin. Furthermore, its central position in the state lowers the risk significantly of natural disasters.

Austin’s position in the transition belt between dry deserts and green, humid regions provides the long hot summers and short winters for which Gens Y and Z yearn. Being on the extreme edge of Tornado Alley means there are far fewer tornadoes than further to the north. However, thunderstorms are common and these can cause flash flooding. Taken together, the City of Austin is a good destination. But is it the best Texas data center?

San Antonio, AKA Military City USA

San Antonio is another strong contender for the best Texas data center location in the Lone Star State. It is located to the southeast of Austin, and half the distance from the Gulf of Mexico. It has fallen back slightly from its position of fastest-growing of the top ten largest cities in the United States in 2010. However, it still has the fourth-largest GDP in Texas.

San Antonio’s primary industries are military, health care, government-civil service, financial services, oil and gas, and tourism. It has a significant number of call centers and is a growth node for automobiles. It hosts five Fortune 500 companies and boasts a thriving business culture.

The vibrant city is 250 miles south of the Dallas / Fort Worth corridor, and 190 miles west of Houston. It enjoys a similar climate to the City of Austin. It has however been prone to flooding in the past, and receives occasional tornados within the city limits. Does this make San Antonio the right place to build a data center? It could be, but there are two more contenders.

The Vast Dallas / Fort Worth Metroplex

Dallas and Fort Worth are north of the city of Austin, and border on Oklahoma. It is the largest inland metro in the United States and the economic/cultural hub of North Central Texas. Its 7.4 million residents contribute to the fourth-largest economy in the country and the eleventh-largest in the world.

No wonder so many enterprises cluster here in the banking, commerce, telecommunications, technology, energy, healthcare / medical research, and transportation/logistics industries. A number of electronics, computing, and telecommunication firms such as Microsoft, Texas Instruments, HP Enterprise Services, and Dell Services have also made it their home.

The metro is set in prairie land with occasional rolling hills. The climate is humid subtropical, meaning summers are pleasant but winters cooler. Heavy rainfall may occur, although historic floods have been curtailed. Dallas itself is in the lower end of Tornado Valley, causing extreme weather events in 2012 and 2015. This could be the ideal Texas data center choice but wait, we have one more.

The City of Houston, Space City

Houston is 200 miles west of San Antonio and completes our set of the four most desirable Texas data centers locations. With so many choosing it, it’s important to understand why it is so high on their list of priorities. Well, first it is the most populous city in the Southern United States. Its economy is thriving on the back of energy, aeronautics, and biomedical research.

Pioneers founded Houston in a marshy area. However, there are numerous well-drained higher-lying areas suitable for data centers. Summers are long, hot, and dry, while winters are mild. The city is south of Tornado Alley, although spring thunderstorms occasionally seed tornadoes.

Houston data centers have been building high wind-load rates into their facilities for years, to counter the force of hurricanes sweeping up from the Gulf. On August 29, 2017, Houston Business Journal reported back on this, noting many data centers emerged unscathed. The city also came to the fore with timely advice on how Houston entrepreneurs could get back on their feet. It is worth noting that, while larger in scope, Hurricanes are generally much less powerful/locally destructive than tornados, provided that you are sufficiently inland from storm surge and isolated from flood plains. We also gain the great benefit of days of preparation versus tornados with perhaps only moments’ notice of warnings.

We are building for the ‘big one’ to enable us to avoid the chaos Hurricane Michael caused when it swept through Florida causing storm damage in Georgia and the Carolinas. Our data center was still under construction at the time when Harvey swept through. We stood up well and our power supply was uninterrupted throughout.

The city’s real strength that could make it a clincher is its mature, diverse business culture. It has small, medium, and large data-driven businesses in energy, manufacturing, aeronautics, and transportation. Moreover, it leads to health care. No wonder it boasts the second-largest number of Fortune 500 companies within its city limits.

Moreover, the Greater Houston Partnership is alive with business-savvy support, and a proven track record of supporting new business initiatives. This is one of the reasons so many data centers choose Houston compared to other options. The best way to decide if this is the Texas data center for you is to come and see for yourself.

Final Thoughts On Choosing What’s Best for your Business

Ultimately, you need to consider what is best for your business. Some businesses prefer being local for latency, data quality of service, and business continuity as opposed to cold site disaster recovery. We chose Houston for its strong business presence, and we believe it will continue to develop as a great data center market. Next-generation facilities are being built, like ours, that address the needs of the Houston market much more effectively than legacy facilities or corporate-owned facilities not designed to specifications required to survive catastrophes known to occur in the region. It is important to be pragmatic in any area you move your IT to about the local disaster phenomenology and solve for that.

Ultimately most businesses want their facilities near them for the reasons mentioned above. They then utilize hybrid offsite strategies for their disaster or business continuity plans.