Death and Taxes

It’s April 19,and with tax day fresh in my memory,I’m reminded of the Reid-McConnell Tax Relief Act,which provides for 100 percent bonus depreciation on deduction allowances for investments in new business equipment placed in service between Sept. 8,2010,and Dec. 31,2011.  I’m no tax professional,but I do know this:corporations with data center needs built into their strategic plan for the next few years might want to take a closer look at moving those investments into 2011.  Companies that need to purchase generators,power distribution units(PDUS) ,or even just servers for their data centers could see some significant savings if covered by the . . . →Read More:Death and Taxes

Phoenix Data Center Update

National Highlights

  • The national wholesale data center vacancy rate is 11.9 percent,significantly less than the U.S. office vacancy rate  of 17.7 percent.

Spotlight:  Phoenix

  • Given that Phoenix has been one of the hottest data center markets in the country,there is still a lack of available wholesale data center options that can accommodate requirements over 500 kW. Digital Realty Trust and I/O Data Centers are the only providers  that will accommodate these transactions.
  • DLR has begun construction on the second phase of its Chandler,Ariz.,property,which it purchased in 2010 from 365 Main.  DLR plans on delivering 165,000 square feet of raised floor . . . →Read More:Phoenix Data Center Update

Latency and High Frequency Trading

The data center real estate market has evolved over the last few years as the demand for wholesale data center space continues to increase. Trading firms and other financial institutions have helped drive certain markets. It will be interesting to see how new regulations and/or recent relocation’s by major exchanges impact the trading environment. Click on the following link to read an interesting article:

What’s the difference between a colocation facility and a wholesale data center pod?

What’s the difference between a colocation facility and a wholesale data center pod?  It seems that I field that question on a fairly regular basis,and lately,the difference is difficult to explain given how much the lines between them have blurred. 

We used to contrast the two by the size of the transaction or when observing separately dedicated infrastructure.  One was likely to provide an SLA whereas the other was a lease,or the difference could also be the length of the lease term or commitment. 

Increasingly,the larger wholesale operators have stretched to do smaller transactions. It makes sense as there is much more deal flow in the 400-700 KW . . . →Read More:What’s the difference between a colocation facility and a wholesale data center pod?

Taxes and Incentives

In response to budgetary pressures,states are trying to drive additional revenue either by using incentives to attract more data center operations or by collecting more revenue from those they have.

Hot Issues:Sales Tax Collection

  • States are becoming more aggressive in defining the conditions under which online retailers must collect sales tax on internet purchases. Texas and Amazon are currently doing battle over this issue.
  • In response,some larger online retailers are reconsidering their affiliate structures in states like Illinois in order to avoid collection requirements.

Sales Tax Expemption

  • Sales tax exemptions on computer equipment and/or construction costs can be found in many states and represent . . . →Read More:Taxes and Incentives

So just what are Tax Incentives Worth – Georgia?

As everyone knows,tax incentives and low power costs are big drivers for data center site selection.  We have talked about power costs before on our blog (and will likely do so again) but have not spent much time on what tax incentives may be worth.

First most states offer incentives only if you are a real catch (i.e. biggest of the big).  Georgia’s minimum spending qualifier is relative low and as a result Georgia

. . . →Read More:So just what are Tax Incentives Worth – Georgia?

Chicago Update

National Highlights

  • Data center construction activity increased by $8 billion from 2009 to 2010  according to International Data Corporation.
  • The streamlined construction processes and economies of scale enjoyed by large developers have resulted in a significant decrease in construction costs on newer projects.  Combined with steady rental rates,this trend has resulted in higher return for developers.
  • While existing wholesale tenants expanding their footprints have dominated leasing activity,  there is significant activity from large enterprise users looking for new requirements.

Spotlight:Metro Chicago

  • Downtown Chicago is one of the tightest wholesale markets in the country,whereas the suburban market is much softer due to new . . . →Read More:Chicago Update

Mardi Gras -The Ultimate 7×24

I spent last week in New Orleans celebrating Mardi Gras.  I am originally from there and so it was a great homecoming.   It was interesting seeing people drift into the hotel at 8:00AM when we were heading out to breakfast  and it made me think about 7×24 operations.

I spoke with one bar owner,who told me that he will clear $150,000 (cash sales) between Thursday AM and Tuesday PM (and his bar was just a little hole in the wall).   May not be much compared to Google’s revenues but its pretty darn good for a small hole in the wall bar.

 When working with clients,I often challenge them . . . →Read More:Mardi Gras -The Ultimate 7×24

Space Invaders:The Take up of Colocation in NYC &NJ

In the latest issue of Datacenter Dynamics Focus I was quoted regarding the NYC and NJ colocation and wholesale data center market.  For Datacenter Dynamics’take on the market and some of my insights,check out the article here:Space Invaders:The Take up of Colocation in NYC and New Jersey

Northern Virginia Update

National Highlights

  • Improving economic conditions,favorable views for recovery and the return of capital availability are driving activity in the data center sector.
  • For both large and small enterprise data center users,demand trends continue to favor operating expense models that call for outsourcing some infrastructure and service components.
  • Supply in the pipeline primarily consists of wholesale space. An increasing number of smaller wholesale suites are becoming available,generating higher levels of commerce and blurring lines differentiating wholesale and retail models with respect to infrastructure.

Spotlight:Northern Virginia

  • Virginia has seen increasing design-build interest from the user community,with a number of operators rumored to . . . →Read More:Northern Virginia Update