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That Sinking Feeling.....

If it's not one thing, it's another. The July 5th edition of datacenterknowledge.com reports that the building that houses the State of Tennessee's primary data center facilities is sinking into the ground.

Some Data Center Site Location Considerations

"Where is the right home for our next data center?"

With the current "boom" in data center development, a number of commentators on the web have exchanged thoughts about data center location and site development requirements. There is no shortage of available ideas. Nor is there a shortage of available properties: if you are in the market for a data center site, you will quickly find real estate brokers (and others) have many properties they want to show you.

Of the millions of available parcels out there, how many are realistically going to meet your goals?

Following are my thoughts on some major considerations in identifying a site for a data center project.

Summary: Given the length of this posting, here is a summary:

At the most intial stage of the search for a data center site, the developer should identify the specific facility product that will make up the project. This includes such elements as buildings, equipment, and other necessary site structures and areas. The extent of these project elements will dictate minimum site areas and constraints. At this stage, consider: potential future expansion; whether the site needs to be greenfield or whether an infill or existing building can suffice; and the timeline. Once you have considered these factors, begin examining potential communities or regions. At this stage of the analysis, you will want to consider the existing and future network conditions, power costs and availability, possible water shortages, government incentives, regional accessibility, and the labor pool. A third stage is to evaluate specific properties. At this stage, important factors are: site size and configuration to satisfy facility requirements (such as building storage, cooling and water facilities, parking, offices, or necessary landscaping), land attributes (such as soil, grade, power and network connectivity, utility lines, and assemblage possibilities), the public regulatory process (including development entitlements and local tax assessments unique to property). I also discuss other considerations, including security, natural hazards, and facility neighbors.

Three Preliminary Points: Allow me add at the outset the following:

1) From a real estate development perspective, data centers should be approached like any other industrial or heavy (intensive) commercial land use. Regardless of the technology employed in any given facility, the range of real estate, site planning, environmental, legal, financial or public agency issues involved will not fundamentally differ from most other types of industrial development.

2) Different developers will emphasize different elements or criteria, depending on the purpose of the facility and targeted facility users and tenants.

3) This is a work-in-progress: contributions and suggestions are appreciated!

Okay -- here goes:

1. What is the facility product? What are the specific buildings and equipment? Do you have a project site setup or template in mind?

A vital, first-cut step in data center site location and development is defining the product you intend to develop -- the specific data center facility components you will install. This helps set the course of your site search and selection analysis. You will have more unique real estate and locational demands, for instance, if your facility will entail construction of tall water cooling towers or will require an onsite water source -- as opposed to a facility that does not require such facilities and instead can neatly fit within an existing, developed urban site.

By way of comparison, few residential subdivision developers or big box retailers will begin a site selection analysis without considering the facilities in their products. In residential developments, the decision on the product type is often made early in the process: are we in the market to build rows of townhomes? Or are we out to develop a single family detached tract? These development types have very different construction, neighborhood design, zoning, and building code requirements. Similarly, in the case of a big box retailer, the corporate determination may be one of either a single room-store, as opposed to a “super-sized center”. A store that requires only a building with parking and landscaping can be much easier to locate than will the store with alcohol sale, an outdoor garden center, or a gasoline and automobile service station.

Keep in mind that facility product definition is not just an essential “first-cut” consideration, but a factor that needs to be continuously referred to throughout the site selection process. Products may need to be modified (scaled back or expanded) to fit into their surroundings. Modifications may be designed and implemented throughout the development process in response to contractual requirements, changes in technology, or municipal agency site design review requirements.

2. What are the possible future change and flexibility requirements? What are maximum space and site locational requirements that could be required to address changing technology in the future?

Once the facility compenents have been identified, data center site selection should almost always incorporate the possibility that changes in technology or business can require onsite capacity expansion or site reconfiguration. For instance, your company may choose in the future to install solar paneling to handle a significant percentage of onsite power usage. If this is at all a distinct possibility, you may want to choose a site that can accommodate an appreciable number of locations on the site for solar panel installation (other than rooftops). You might also simply want to acquire a site that you can later market as having expansion capacity, after your own company’s usage life of the site has concluded (whether it be 10 years or longer).

3. Infill or Raw Land? Can existing buildings be used? Or do you need a greenfield site?

Infill sites can susbsantially curtail development delays. Some developers argue that greenfield sites are best for security and space-demand reasons. Or, a greenfield site may be necessary to be near a power station or for some other compelling reason. But in many cases, a number of other, countervailing factors can dictate that an infill site is ideal. An infill site may be one with immediate utility hookups, a substantially shorter construction timeline, or better access for center employees. Or it may simply be the type of site that fits with a new corporate environmental sustainability initiative.

4. Timeline: What is your timeline?

Naturally, the philosophy of “as soon as possible” is an important attitude to have in any business. But it is not precise enough a tool for daily planning. I recommend you consider the specific timeline demands before choosing a site or even a community. Facility review by local jurisdictions (such as in land use planning) or availability of qualified local construction labor is often a key determinant. Must your facility be up and running within 12 months? Or can you afford to take four years to build the “ideal” facility on an ideal parcel?

You may have been reading recently about a project to build a data center in 60 days. My advice is: don't try this at home. Even if you could build your center in 60 days, you should assume it is going to take at least most of a year in most American jurisdictions just to secure a contract for a site and obtain all entitlements.

5. Choosing the region, community, or neighborhood:

Just as a big box retailer needs to choose a community based on demographics and market demands, a data center developer often needs to consider things from the regional, or community-wide perspective, first, before proceeding to the parcel-level of analysis. Following are some major points of consideration in identifying the right community for your new facility:

a. Network: What is the existing network infrastructure in or surrounding the community?

Where are the needed data center location areas -- for now and possibly in the future? This question will often be asked by a developer of a data center intended to serve more than one data source – for example, data processed by a large Internet company. You may find yourself choosing a specific region, city, or neighborhood within a city because presently no other facility is there to serve your needs.

* What are the fiber network access points available in the area?

* Is there an existing fiber network available that we can actually use? Or will we have to install significant lines or expend vast sums using lines owned by others?

* How close is the neighborhood to end-users? This may not be as important a consideration, given the speed with which data moves in the fibre optic world. Nevertheless, a facility that can speed up the transmission time by even one or two seconds can make the world of a difference for some data center developers.

b. Power: how much and how often?

* Electricity Cost: current and forecast?

* Power reliability: Does this community have a lot of brown-outs? What do online sources tell you about the local "grid"?

* What is the power capacity? Will local utilities view your facility as a drain and potentially hesitate to cooperate?

c. Water Shortages: Communities across the United States and the globe are increasingly adopting restrictions on water hookups. This is important your facilities cooling technology will require susbstantial water use.

d. Industrial development incentives: If your facility will generate more than a handful of jobs, you may want to consider possibilities for benefiting from local economic incentives intended to encourage your type of development. Such funding can come in the form of direct funding and loans, tax benefits, the availability of industrial development or revenue bonds, the presence of redevelopment areas, or enterprise zone designations. Financial incentives may offset the expenses you incur in processing timelines or investment.

e. Regional accessibility: is the community within less than a half-day’s commute for your company’s IT staff? Anything longer could cause logistics problems or simply require more onsite staffing.

f. Labor Pool: Availability and cost for qualified personnel? The presence of universities and technical colleges in the region, as well as reasonably affordable housing and a reasonable quality of life, will improve your labor pool.

6. Choosing the Specific Land:

a. Sufficient size: The land should be of a size sufficient to accommodate the facility size and layout, including room for growth. Here are some common site plan elements in data centers:

* Building footprint (including the “envelope”, which in some jurisdictions is the area immediately outside of the building on which outdoor features such as patios, sidewalks, and other features may be developed)

* Cooling towers. This is important for some data center types.

* Water storage for backup.

* Parking (sufficient to accommodate increases in staffing)

* Offsites (driveways, roads, landscaping)

* Backup generators

* Any potential on-site sources of power supplementation (such as solar panels or wind turbines)

b. Site attributes: Whether you are developing a data center or something else, most industrial or commercial real estate due diligence experts will have a checklist of site analysis considerations that get poured into the equation of the site development process. Here are some of the factors I would include in my matrix:

* Locational compatibility:
o What kinds of neighbors are there to oppose my facility?
o Does the site butt up against some railroad tracks or a freeway? Perhaps a bit stretched, but there could be safety concerns.

* Is the site flat, steep, or stable? (This affects drainage and construction considerations.)

* Is the property in a flood zone?

* Is the soil stabile?

* Is there soil contamination?

* What are the on-site resources?
o Is there are backup water supply (assuming one is needed)?
o Is there sufficient water for cooling processes?

* Power:
o How close is the site to a power plant?
o More than one substation available?
o Can you obtain written guarantees from the local utility for power, even in downtimes? Is it possible to achieve an agreement to prioritize service your neighborhood over others in event of a blackout?

* Utility lines: age, condition, and proximity are all important: will the project have to install a main?

c. Site access: This is usually not going to be a problem unless you find you have to negotiate a new cross-access easement from a neighbor. Then things can get tricky.

d. Assemblage possibilities (purchase or lease): Sometimes the ideal site is made up of more than one legal parcel held by different persons.

7. Public regulatory process: This is an obvious consideration, and the answers can only be found by careful research into the local jurisdiction, its practices and customs. Here are some major elements making up a local public regulatory process:

a. Land use and permitting:

* Existing zoning and land use planning designations (in many jurisdictions, changing the zoning or plan designations on a site can take several times longer than just acquiring use or construction permits);

* Design and aesthetics review (including for exterior equipment)

* Construction review (the timelines in some communities is burdened by a sparse staff, combined with an enforced policy of frequent inspections throughout process).

b. Assessments, bonds, local districts and incentives for the specific neighborhood: Sometimes, a parcel that seems unattractive for ideal design considerations will become very attractive if a particular parcel will benefit from local property taxes, district assessements, or neighborhood-improvement bonded areas affect the pro forma.

8. Security and Natural Disasters:

Security and site vulnerability to natural disasters are sometimes pointed to as major site selection factors in online published checklists.

a. Security. Contrary to what some online checklists or commentaries state, I do not consider security a major determinant of data center location.
Every facility is subject to terrorist attack, burglary, or vandalism. I am not suggesting you place signs outside your facility advertising “storage and processing location for Acme Corp.’s highly classified data”. Instead: focus on a facility site and building design that fits your other needs and adjust your security procedures, staffing, and building design accordingly, to address security concerns.

b. Vulnerability to natural disasters. Every region has some type of natural hazard. Unless you are preparing a fallback data center, or one capable of protection against global or regional disaster, the risk of natural hazards is usually only going to matter at the parcel level of analysis. Of course, within each region, some sites are less vulnerable to significant damage than are others. At the parcel-level of analysis, in earthquake country, you will find some properties are more are subject to liquefaction and instability than are others.

Welcome To Industrial Acres

Welcome to Industrial Acres. Some thoughts about productive uses of land. This includes: site selection; industrial location; corporate real estate; site development; land use planning; environmental assessment; project environmental impacts; project impacts mitigation; parcel assemblage; local economic incentives and programs; global infrastructure; infill development; green and sustainability considerations. No matter what organization you may represent, the possibilities for making wiser choices in industrial and commercial land use are boundless. Have fun. If you are embarking on a site selection process, start by taking a trip to the ivory tower and review Professor Alfred Weber's industrial location triangle.