Data Center Activity Reins on the Northwest

At the height of the telecom and Internet expansion during the 90s,the Northwest was considered a Tier 2 region because of its physical distance to other major cities and the limited population mass. For most carriers,it was the last piece of the national telecom network before the market crashed. When data centers began to proliferate a few years ago,the Northwest was still seen as the domain of local enterprise users like Boeing,Microsoft and Amazon. Recently,there has been strong interest by national data center developers and enterprise users for data centers in Washington and Oregon. The demand for new data centers in the Northwest is driven by the promise of lower costs.

Several of the large enterprise users with data center operations in the Northwest are from Silicon Valley. The high cost of doing business in California for large-scale DC operations continues to grow. By contrast,the Northwest is in the same time zone as California and served by direct flights from several air carriers to most West Coast cities or regional hubs in the Midwest. This is not only relevant for California based companies. Companies headquartered on the East Coast or beyond seeking a West Coast hub no longer look just to California.

Further,the combination of lower power costs and a temporal climate allows the extensive use of ambient air at least 70 percent of the year,resulting in more favorable operating costs. In addition,a significant amount of the power comes from renewable sources allowing greater price stability and the ability to garner LEED certification without excessive cost penalties.

Douglas and Grant counties own and operate their own hydro-electric dams. As a result,the cost of electricity is $.02 per kWh versus a national average of $.06 per kWh. Only one utility in Chile has cheaper power than these two counties in Washington.

In Oregon,utilities are unregulated and electricity costs range from $.03 -$.12 per kWh. Companies considering Oregon as an option for their data centers often look for green energy alternatives. One company which went to Oregon found they were able to obtain long term price guarantees from one particular power company,in part,because of the manner in which that utility was structured.

From a personnel standpoint,companies which have located in the Northwest are surprised by the number of qualified applicants which are available to work or willing to relocate to rural parts of the Northwest for jobs and an unhurried lifestyle.

Eastern Washington and all of Oregon is in Seismic Zone 3,whereas the Puget Sound region is Seismic Zone 4,the same seismic zone as the Bay Area. Most of eastern Washington and central/eastern Oregon are outside the 500-year flood plain,which further limits risk of natural disasters.

The Northwest also has stronger and shorter fiber connections to Asia,and as a result,the region offers lower latency than California.

Lastly,the economy of Northwest businesses has,at its core,a strong technology base resulting in a growing demand by smaller,local companies for colocation and hosting services. Currently,the colocation and hosting opportunities are concentrated in the Greater Seattle and Portland areas.

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