Data centers – those massive, humming hubs of the digital world – are no longer just tucked away in tech-centric cities. Increasingly, they're becoming a hot commodity for economic developers everywhere, from bustling urban centers to quiet rural towns. But this shift isn't without its controversies. This blog looks at the urban vs. rural data center scenario and lays out some general “pros and cons.” Let us know where your community falls on the geographic spectrum and how your community is embracing the industry.
Data Center Pros
One of the first things you’ll learn about data centers is they bring significant investments. Hardware and software costs, specialized HVAC systems for cooling equipment, prime property investments with access to utilities, and specialized construction requirements are steep and add high value. At the local level, that translates to high tax revenues and can generate significant community financial returns. The next thing you might learn is that data centers pay well. The engineers, techs, and security personnel ensuring data centers run safely and efficiently are often industry specialists and demand higher wages. Finally, you may discover that data center projects sometimes benefit their immediate communities because of the reliable infrastructure requirements. Homes and businesses that share a power grid with a data center may have more reliable electric service.
Data Center Cons
Even with the financial benefit that data centers can bring to communities, there are also some potential downsides. For starters, the expensive and specialized equipment that generates the high local taxes I just mentioned is needed because data centers demand high energy consumption for operations. Data centers consume massive amounts of electricity, contributing to greenhouse gas emissions and potentially straining local power grids. Because data centers constantly need the cooling mentioned above, they also require large amounts of water which can strain local water resources, especially in water-stressed areas. Finally, while data center jobs pay well, the number of jobs at each site is often relatively small compared to the size of the facility and the investment required to run it. Those jobs' specialization also often require unique skill sets, which can be hard to come by in certain markets.
Rural vs. Urban: A Clash of Perspectives
In recent months, we’ve received lots of interest from our rural and mid-size market friends and clients in pursuing data center operations. Especially in communities where population growth is stagnant or declining, these facilities are sometimes seen as a viable option for boosting the tax base, and they don’t require hundreds of employees for successful operations. These scenarios are made even more attractive when a major production facility that’s been shuddered can provide readily accessible power. On the contrary, one of our urban clients is actively considering taking public action to prevent the proactive recruitment of data centers to their community due to concerns about future resource constraints. While data centers may be seen as a lifeline, bringing much-needed jobs and investment to areas with declining populations and limited economic opportunities to rural communities, in urban areas, the consumption of valuable real estate, competition for skilled workers, and the potential strain on already burdened infrastructure may more quickly rule the day.
Ultimately, the successful attraction of data centers hinges on finding the right fit. Communities must weigh the potential benefits against the challenges and develop strategies aligning with their long-term goals and values. As the digital world continues to expand, the role of data centers in economic development will only become more prominent, making this a debate worth watching.
If your community is thinking about data center attraction, but unsure about whether you’ve really got what you need to support the industry, let us know. Hickey Global can help you make the best determination by looking at everything from sites to skills. Connect with our team today to learn more about our services and move several steps closer to pulling the plug on or plugging into data center attraction.
Comments