Data centers are often built in more rural areas to take advantage of preferred climactic conditions, close proximity to "green" sources of electricity and land prices that are much more affordable than those found in major urban areas. However, as Microsoft recently demonstrated, when it comes to data centers, even rural land can command a premium.
According to a recent article on Data Center Knowledge, Microsoft recently announced that it would be purchasing 100 acres of land in Iowa for the purpose of building a data center. The facility, which is expected to cost $1.1 billion, will be built on land that currently includes a golf course and some farms. It will be located about eight miles away from an existing data center that Microsoft owns in West Des Moines.
The land itself will cost $6 million, which the news source describes as a "good deal" for Microsoft. However, Steve Bruere, president of the People's Co., said that the land's poor soil quality only made it worth about $10,000 per acre had it continued to be used for farming purposes.
"The property certainly commanded a significant premium because of its use as a data center," he added.
Bruere noted that this is not the first time land in Iowa has been sold for a higher-then-normal price, due to plans for data center construction. In fact, Microsoft's West Des Moines location went for about $130,500 per acre in 2008. Given the estimated $1.1 billion dollar construction cost of the data center, the $6 million site expenditure is relatively insignificant.
For a land holder with acreage in a suitable location, targeting data center use may be a great way to increase the value of a parcel of land. Land holders may want to conduct basic due diligence to understand the relative advantages of their site. Items such as climate, utility rates, sources of nearby electrical generation and locations of fiber trunks are critical items for prospective data center users. In addition, governmental and NGO training, tax and financing incentives all play into positioning a site for data center use.
