Let’s take a look at the Illinois Data Center Market: Where are we headed?
Chicago is one of the most important geographic locations of the internet age. It is our nation’s 3rd largest city and the population is more than twice the size of its surrounding areas. This population represents a large volume of consumers, participants, and produces in many aspects and venues. The rapid financial trading that occurs downtown with other financial exchanges around the globe gives us a high and stable demand for high-end connectivity. There was a time when the United States only had four network access points for the internet – Chicago was one of them. And the only one in the Midwest.
Chicago and its suburbs have relatively low costs of electricity and few environmental risks, which makes them prime locations for both giant enterprise and colocation data centers. Most of the major data center companies have multiple facilities in the city of just outside it. According to CBRE, Chicago is the 3rd largest data center market in the United States. Outside of Chicago and the suburbs adjacent to O’Hare Airport, the rest of the state has very few other data centers.
What About Growth?
The need for data centers is increasing at a much higher rate than the increase in the capacity of data storage devices. For the foreseeable future, the world will need an increasing number of data centers to maintain data in secure and accessible environments. Currently, Chicago is the third largest data center market in the United States. However, it is growing much more slowly than other major markets. From June 2017 to June 2018, the Chicago data center market grew at a rate of 7 percent. At the same time, the Atlanta market grew 12 percent, the Northern Virginia market grew 16 percent, and the Phoenix market grew 26 percent. And for all of the success of the Chicago area at attracting data centers, the rest of the state of Illinois has very few data centers. This is typical of states that have places with special catalysts for data center location, but that do not have state-wide data center incentives.
Even though the Chicago area ranks third in the country for data center capacity, an increasing number of states, including neighboring Iowa, are wooing the facilities with tax incentives. In contrast, Illinois does not have incentives available, which can bring economic benefits including improved power grids and telecommunications systems. This would then attract more companies to bring more jobs to Chicago. Some worry that without incentives, the state’s data center industry growth will be impacted. We have a lot of smaller data center companies coming to Chicago, but not the tech-giants like Amazon or Google. Illinois lawmakers have previously introduced bills for tax credits in data centers, but have yet to go through. Are we missing out on huge opportunities? For now, we wait.
Referenced From Magnum Economics and Chicago Tribune