It’s true that data centers are facing an oversupply in some areas, but that doesn’t appear to be the case with Michigan data centers.
Michigan is an up and coming destination for data center growth for a number of reasons. Let’s look at why Michigan is so appealing, and why it’s in a good position concerning market oversupply.
Why Are Michigan Data Centers So Attractive?
Investors are understandably concerned about too much data center construction. The dot-com bust in the early 2000s still leaves many leery of unconstrained growth.
New innovations in design and power needs have some data centers downsizing and optimizing.
Consolidation and competition from cloud services has also abated the construction. However, in Michigan, the opposite is true with new construction underway.
Quicken Loans, US Signal, and Online Tech were just three players who recently built large data centers in Michigan. General Motors is consolidating its 23 data centers into two large centers, one in Milford, Michigan, the other in Warren, Michigan. Their old facilities could be leased in the future, allowing for new data center operations without adding additional construction of new centers, thereby limiting an oversupply.
Other Business Benefits
Here are some other Michigan features that make it a good colocation data center market:
- Michigan has one of the highest percentages of engineers in the U.S. providing a good IT employee base.
- The University of Michigan has some of the top graduate programs in the U.S. in Computer Science, Statistics, and Mathematics, again, providing a huge employee base of mathematics and computer employees.
- The Michigan economy has been on an upswing after recovering from the automobile industry crisis.
- The high-tech community is growing by leaps and bounds. In Ann Arbor alone, over 40 tech-based companies have relocated or expanded within the last five years. These companies need data centers.
- Michigan’s cool year-round climate lowers air conditioning energy costs.
- Electricity rates in Michigan are lower per kilowatt than either the West Coast or East Coast.
- Michigan is aggressively implementing tax reform initiatives to make Michigan attractive to business – specifically technology-based businesses.
- Michigan is a perfect location for disaster recovery. Centrally located with a good infrastructure in place, it is also free from threats of nature such as floods, earthquakes, hurricanes, or tornadoes. It is also less likely than other technology centers, such as Silicon Valley or New York, to be targeted with terrorism.
- In 2015, Michigan has so far provided around $7 million in incentives to data centers through economic development programs.
The Future of Michigan Data Centers and Market Oversupply
Currently, there are 44 colocation data centers in eight different areas in Michigan.
A survey in August 2015 listed Ann Arbor, Michigan as number five in the top ten cities in the U.S. to take advantage of big data. With all the Michigan data center market has to offer, there is plenty of room for growth in the number of data centers, as well as the supporting markets.
Do you feel there is an issue with the number of colocation data centers in Michigan? Too many? Too few? Let us know your thoughts in the Comments box below.
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