As more aspects of our lives become digital, the need for data centers is increasing exponentially. COVID fast-tracked the upsurge in data center demand, as businesses worldwide transferred communications and operations to digital platforms — but the need for data centers is permanent.
“With an increase in devices needing to connect to each other and the Internet of Things (IOT), the amount of data needed to do this will always be growing, furthering the demand for additional space within data centers,” says Megan Baird, Professional Engineer (PE), a senior project manager at Bohler, a land development consulting and technical design firm.
Getting the right space with the right zoning, utilities and market timeline can be a daunting task that requires extensive planning. Baird says three major factors determine whether a site is a prime data center opportunity: utilities, zoning and space. Plus, Baird explains how to get a property to market once the planning is done.
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What’s Available to Help Developers
- Tax incentives vary by state and locality and can depend on the number of jobs created, equipment used or amount of money invested.
- Overlay districts are a regulatory tool where jurisdictions specify additional restrictions/allowances in addition to the underlying zoning district rules. These can make approvals easier (while also restricting available locations).
- Fast-track programs offer priority reviews for projects likely to have a significant impact on the tax base.
- Advance permits for site clearing allow a developer to begin clearing a site before a detailed design is in place, speeding up the construction timeline.
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Utility Considerations for Data Center Development
The old maxim of “location, location, location” doesn’t hold true for data centers. It’s more like “power, power, power.”
According to Baird, “If you can get power and fiber to a site, that makes the site feasible, something that an end user would look at. Power and fiber are the limiting factors as far as speed to market, and power is usually the bigger of the two limiting factors. We’re seeing a need for bigger parcels of land so that we can put substations on them to power the sites. Substations transform electrical loads from power lines into a usable amount of current. Data centers need power, and they need it fast. If an end user can control that variable by adding substations on the land, it can help them get to market more quickly.” Generally, a large site needs its own substation, an undertaking that requires coordination with utility companies.
Interest in green initiatives abounds for data centers — in large part due to their requirements for extensive utilities. Markets that support these green initiatives see greater interest from data center operators, Baird says. “For example, using reclaimed water to cool the server racks is cheaper (sometimes millions of dollars cheaper) than using potable or domestic water. Reclaimed water is huge in Loudoun County, Virginia; that’s part of why Northern Virginia is such a big market [for data centers]. The reclaimed water is available and exists as a public utility.”
Other green initiatives might take the form of power delivery systems. Solar power, wind turbines and other forms of power delivery aren’t stable enough yet to totally replace fossil fuel systems, but there is a pronounced interest in incorporating green technologies.
Zoning Considerations for Data Center Development
Lack of clarity in zoning ordinances can slow efforts to bring data center properties to market. Many ordinances do not specifically address data centers, and the assets can fall under the less desirable “industrial” category. There are two common options in such situations: rezoning or special exceptions.
A property can be rezoned so that a data center can operate there “by right.” The benefit of this approach is that developers don’t necessarily have to state publicly whether they’re building a data center. As Baird explains, “You’re just switching the property to a zone that allows data centers.” Rezoning a property may not need to be an overly long or intensive process — depending on the location. In areas like Atlanta, rezoning could take as little as three months, whereas in Fairfax County, Virginia, it can take upwards of a year.
If a developer is unable to rezone a site, applying for a special exception to allow data centers is an option, but it can come with complications. Applying for a special exception makes it clear the property being developed will be a data center. “Depending on where you are, you may be required to send notifications to adjacent property owners, opening the door for these owners to object or resist a data center.”
“A developer needs to work with a civil engineering consultant and land use attorney to figure out what’s needed in terms of zoning,” says Baird. “A good project manager can work with the agencies within a modified process to keep you moving and hit your end delivery date to power a building. By working within modified processes, we can help tailor our approach to alleviate pain points throughout the development process.”
Savvy planning leads to essential processes happening quickly and in the right order. “Phasing of buildings has become vital: planning is fundamental to ensuring that buildings are powered on at the right time. This is critical when a building needs to be timed in conjunction with another building that might be needed for redundancy,” says Baird.
Space/Location Considerations for Data Center Development
Size matters for data centers — end users generally need at least two buildings on a site to take advantage of efficiencies in utilities, security and proximity to other data centers. A good target site footprint for two such buildings is 40 acres, and many developers are looking for sites that are hundreds of acres. Unlike traditional industrial assets, data centers do not require access to major roadways.
When it comes to physical location, Northern Virginia still dominates the market, and submarine fiber cables in Virginia Beach are making the Interstate 95 corridor attractive for data centers. But the high cost of land in Virginia is leading to increasing interest in markets like Atlanta; Columbus, Ohio; Texas; and parts of New Jersey.
Data center developers are often willing to consider non-traditional locations, including those in floodplains. However, Baird warns data centers have much less tolerance for possible flooding and must be designed to cope with the unexpected. Stormwater management must be over planned, to a degree, to avoid catastrophe.
Planning to Get a Data Center to Market
“Once you have a parcel that has power and fiber and is zoned correctly, that parcel is going to be worth a lot,” Baird says. “The market is both expensive and competitive — especially because there are more players in the industry than ever before. You’ve got more people going after the same few available sites, so you need to move quickly, and you want someone who knows the process. A developer is going to want someone who’s a partner in making decisions rapidly. Bohler can give good information that will help throughout a project’s timeline, and our consultants can truly advise, saving developers time and money at each stage, from planning to getting an asset to market.”
Bohler is a content partner of REBusinessOnline. For more articles from and news about Bohler, click here.