CBRE report: Operating a data center in Kansas City makes good financial sense

data centerby Dan Rafter

Want to build a data center? Kansas City, Missouri, is a good choice for a location.

That’s because the city ranks as one of the most affordable markets for building, commissioning and operating a 5-megawatt enterprise data center over a 10-year period, according to the latest research from CBRE.

What makes Kansas City so affordable? CBRE says that Kansas City offers valuable tax incentives for those builidng and operating enterprise data centers. At the same time, Kansas City has lower power, facility, construction, land and staffing costs, according to CBRE.

The CBRE study looked at the cost of building, commissioning and operating a 5-megawatt data center for 10 years across 30 U.S. markets.

In Kansas, Gov. Jay Nixon in 2015 signed a bill authorizing tax exemptions for data storage facilities in Missouri.

“Kansas City now has available incentives, excellent telecom infrastructure, superior energy capabilities and a deep IT talent pool,” said Joe Orscheln, vice president on the Kansas City industrial team for CBRE, in a statement. “Combine all of these elements with Kansas City’s central location and you have an excellent marketplace for data-intensive operations.”

To encourage the building of data centers, municipalities do have to take certain steps. CBRE points to tax incentives as a key. Data centers require plenty of capital. They also generate sales and property tax revenues for state and local jurisdictions.

Because of this, markets that want to attract data centers typically offer significant tax incentives to help reduce the total cost of operations. The CBRE report found that Kansas City’s net tax burden accounted for 6.6 percent of the total project cost in both Kansas City, Missouri, and Kansas City, Kansas, well below the 8.7 percent average total project cost across the 30 markets in the report.

Construction costs matter, too. Facility construction costs in both Kansas City, Missouri, and Kansas accounted for 34.9 percent of the total project cost, just below the survey average. Kansas City, Missouri, also led the survey with the lowest land acquisition costs as a share of the total project cost at one-10th of 1 percent.

This entry was posted in Kansas City commercial real estate, Kansas Commercial real estate, Missouri commercial real estate, national commercial real estate and tagged , , , , , . Bookmark the permalink.

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