Predicted boom of data centers could impact energy demand, job market

By David Pendered

Metro Atlanta may be on the cusp of a building boom for data centers, according to a new report from CBRE. The energy-hungry facilities could present new challenges and opportunities in a region better known for its office and retail commercial markets.

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The inventory of space available in metro Atlanta’s data centers could triple if all proposals are developed, including the planned expansion of the QTS facility near the Fulton County Jail. File/Credit: David Pendered

Challenges include providing electricity to data centers, which Georgia Power describes as, “notorious for their intensive energy consumption.” Data centers can have a power density 40 times greater than that of an office building, Georgia Power reported, citing the U.S. Department of Commerce.

Opportunities include possible job creation in new services that are evolving in the data center space, which CBRE’s report noted could include, “layering in managed services, more efficient build costs, changes in design, changes in requirement sizes and needs….”

The capacity of data storage in metro Atlanta would nearly triple if developers build all the product now in the pipeline, according to CBRE. The region now ranks sixth out of the nation’s top seven primary data center markets and is in a virtual tie for fourth place in vacancy rate.

The locations of the proposed facilities are not identified in CBRE’s report of the sector for second half of 2018, titled North American Data Center Trends Report. CBRE is a global commercial real estate services and investment firm based in Los Angeles with offices in Atlanta.

The data center sector is attracted to metro Atlanta in response to two incentives – one national and one regional:

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Atlanta is solidly in an expansion phase for data centers, according to CBRE analysts who determined the local market favors landlords because of a strong demand for space in an under-supplied market, marked by declining vacancy and higher pricing. Credit: CBRE

  • The sector benefits from provisions in the federal tax bill President Trump signed in 2017;
  • The region’s comparatively low cost of land and electricity, as well as local development incentives.

Tim Huffman, CBRE’s senior vice president and director of data center solutions, put the two factors on similar footing in his overview of the metro Atlanta market:

  • “Atlanta is one of the lowest total cost of ownership environments in the country for data center operations. Our cost of power is less than 4 cents per kilowatt hour.
  • “The new tax incentive bill relieves operators and tenants of sales and use tax on facilities infrastructure and [information technology] hardware. In [the first three months of] 2019, we’ve seen a significant uptick in out-of-region projects considering Atlanta, as well as larger than normal local organic growth.”

An additional incentive cited in the report is metro Atlanta’s “generous incentive programs.”

CBRE analysts cited one data center expansion project that’s pending approval from Atlanta – at a location near the Fulton County Jail and southwest of the planned public park at the city-owned site of the former Bellwood Quarry.

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Northern Virginia has so much data capacity under construction that the expansion alone is larger than the existing inventory of any data center in the nation, according to CBRE. Credit: CBRE

QTS has filed an application with Atlanta for approval of an expansion that would create a data center of 1.4 million square feet, a facility nearly as large as Lenox Square. QTS has applied for a permit to build a center with 488,999 square feet. This size is significantly larger than the 300,000 square feet of new space identified in CBRE’s report.

The energy challenges presented by the data centers are contemplated in the Better Buildings Challenge. Atlanta participates in the program, which is an affiliate of the U.S Department of Energy.

The Energy Department’s BBA page on data centers observes that steps that seem minor can significantly reduce energy consumption. One measure calls for using outside air when it’s chilly enough to cool the equipment, rather than always relying on processed air.

Intuit has already implemented some cooling initiatives and has achieved a 20 percent energy reduction at its data center in Quincy, Wash. The facility is moving to its next phase, according to a video presentation by Intuit’s Dave Breland: “Our goal right now is on our outside lighting, and that is moving to an LED solution.”

 

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Rental rates in metro Atlanta’s data centers are among the lowest among the top seven priority markets for data centers. Credit: CBRE

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

4 replies
  1. Avatar
    Dana F. Blankenhorn says:

    Many data centers use renewable energy. They find that putting solar panels on their roofs can, even with the additional cost of batteries for storage, beat the cost of grid energy.

    Georgia Power is spinning you here, David. They are claiming that their nuclear power plants are necessary for “high energy consumers” like data centers. They’re not.Report

    Reply
    • Avatar
      Chris Johnston says:

      Dana, you are wrong about solar energy for data centers. I have designed and consulted on data centers exclusively since 1988.
      The available roof area in a data center is sufficient to supply only a small percentage of a data center’s energy consumption. Those solar systems that are installed generally supply small loads like lighting. And putting solar panels on the roof increases the risk of building damage and leaks during high wind events.Report

      Reply
  2. Avatar
    JWK 1957 says:

    Dana is right on point. They certainly try and practice sustainability when it comes to power (solar) and cooling (water reclamation). The other two legs of the stool are fiber connectivity and cheap land. There is absolutely no need for additional nuclear facilities, it is a false argument. The other fallacy is the need for incentives to attract the business. Their is very little manpower needed to operate and manage a data center…the State should focus on jobs that are much more labor intensive.Report

    Reply
    • Avatar
      Chris Johnston says:

      The governments care about tax revenues from data centers, particularly the IT equipment that is replaced every three years or so.
      There is no free lunch.Report

      Reply

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