In recent years, the demand for robust and efficient data centers has soared, driven by the explosive growth of digital information and the pressing need for data security. With government property offering vast tracts of land, often with existing infrastructure, the potential for developing data centers on such sites is gaining attention. Leasing government property for data centers not only leverages underutilized public assets but also presents economic opportunities, from job creation to enhancing local technological capabilities. As we delve into the intricacies of establishing data centers on government property, we'll examine the benefits, challenges, and strategic considerations involved.
Does your government agency own vacant land or underutilized property? Consider leasing it for data center development to generate revenue and contribute to local economic development and technological advancement. LandGate helps government agencies lease properties for data centers for free! Book a free consultation call below:
Benefits of Data Center Development on Government Property
Leasing underutilized government properties for data center development can provide significant advantages for both public agencies and the private sector. The benefits of data center development on government property include revenue generation, economic growth, technological advancement, revitalizing government property, and facilitating environmental remediation efforts.
1) Revenue Generation
Leasing government-owned land for data centers provides agencies with a new long-term revenue stream through lease payments paid by the data center developer. These funds can be reinvested into essential public services and infrastructure. Additionally, data center development on government property can also generate indirect revenue through increased tax revenues and economic activity in the surrounding area.
Loudoun County, Virginia serves as a great example of the benefits of increased tax revenues from data center development. The exponential growth of data centers in Loudoun County has boosted tax revenue by an estimated $890M, covering most of the county's $940M operating budget. A data center costs the county just $0.04 per $1 of tax revenue, compared to $0.25 for typical businesses. Thanks to this windfall, Loudoun County has the lowest real property tax rate in Northern Virginia, about 25% lower than neighboring counties.
2) Economic Growth
Data center development on government property provides significant economic benefits by attracting new businesses, creating jobs, and stimulating economic growth. Data centers require a large workforce for construction, operation, and maintenance, providing employment opportunities for local residents. For example, in Loudoun County, data center development alone has created 12,000 jobs.
Additionally, data center development also lead to broadband deployment the development of ancillary businesses and services in the area, such as restaurants, housing, and retail, further boosting economic growth.
3) Technological Advancement
Data centers are crucial components of our modern digital infrastructure. By developing data centers on government property, agencies can support the growth and development of technology in their communities. This not only brings new technology jobs but also enhances technological infrastructure and access to high-speed internet, which is essential for both businesses and individuals.
4) Maximize Government Land & Property
Utilizing government land for data centers offers a chance to revitalize underutilized properties. Many government-owned lands sit idle, presenting an untapped resource for economic growth. By converting them into data centers, public agencies can transform neglected areas into vibrant digital hubs. This not only optimizes land use but also enhances and revitalizes these spaces, benefiting the environment. Additionally, data centers can attract further investment and development, creating a ripple effect that extends innovation benefits beyond the initial site.
5) Facilitates Environmental Remediation Efforts
The development of data centers on government-owned properties can facilitate environmental remediation efforts on sites previously deemed unsuitable for other types of development, thereby improving land value and promoting sustainable land use. As large land sites for data centers becomes more scarce, properties such as brownfields and contaminated sites will start to become attractive for data center developers. Many government agencies own brownfield properties, and leasing these properties for data centers presents a great opportunity for remediating these sites while generating revenue and contributing to local economic development.
Types of Government Properties Suitable for Data Centers
Most types of government-owned properties are suitable for data centers. The main types of government properties suitable for data centers are vacant land, military bases, and brownfields and contaminated sites.
Vacant Land: Vacant, underutilized land owned by government agencies can also be utilized for data centers. These properties often have existing infrastructure such as roads, water and power lines, which can reduce development costs for data center developers. Additionally, these sites may be located in areas that are ideal for data centers due to factors such as low risk of natural disasters or proximity to major fiber-optic networks.
Brownfields & Contaminated Sites: As large properties suitable for data centers becomes scarce, placing data centers on brownfields and other contaminated sites becomes an attractive option. There are thousands of these government-owned properties throughout the U.S., many of which are currently underutilized, even though these types of properties can still be utilized for development purposes with proper remediation efforts.
Military Bases: Many military bases have been closed or restructured in recent years, leaving behind large tracts of land with existing infrastructure that can be repurposed for data center development. These properties are often already equipped with high levels of security and reliable utility systems, making them attractive options for data centers.
Challenges & Considerations of Data Centers on Government Property
While developing data centers on government property offers many benefits, there are also challenges and strategic considerations that must be taken into account. The challenges of data center development include navigating regulatory requirements, managing public perception of data centers, and maneuvering strategic planning considerations.
Regulatory Requirements for Data Centers
Government-owned properties may have specific regulations or zoning restrictions that need to be followed, which can impact the design and development of a data center. It's essential to thoroughly understand these requirements before beginning any plans for data center development on government property.
Public Perception of Data Centers & Community Engagement
The development of data centers on government property can sometimes face resistance from local communities who may have concerns about noise, traffic, and other potential impacts. It may be crucial to engage with the community and address their concerns through transparent communication and education about the benefits of data centers.
Strategic Planning for Data Centers
Data center development on government property requires careful strategic planning to ensure long-term success. Factors such as location, power availability, and future expansion plans must be carefully considered in the initial stages of development to avoid any potential setbacks or limitations in the future. When it comes to utilizing brownfields and contaminated sites for data center development, even more planning and due diligence is required to ensure that the site is developed and remediated safely.
Property Qualifications for Data Centers
There are various factors that affect whether or not a specific property qualifies for a data center lease, regardless of if it is a brownfield or contaminated site. The main property qualifications for data centers are location, acreage, proximity to power sources, and fiber optic connectivity availability.
Property Location: Location is the key determinant of a property's suitability for a data center. Ideal sites are characterized by robust connectivity, a large population base, favorable tax laws, affordable and reliable power, low natural disaster risk, and direct access to renewable energy.
Property Size: Today's standard 40+ megawatt data centers require at least 10 acres of land, although 40+ acres is considered ideal. The larger the property, the more suitable it is for a data center.
Proximity to Power Sources: Data centers demand rapid access to power. Therefore, locations near or adjacent to substations and transmission lines are optimal for such facilities. However, this proximity is not a necessity. Large data center projects typically involve upgrading the existing power grid and building their own substations to ensure sufficient energy supply. Developers are often willing to invest in new substations to support their projects.
Fiber Optic Connectivity: Data center sites must have access to fiber optic infrastructure, which is continually improving and often found in highly developed areas. However, the absence of fiber is not necessarily a dealbreaker. If a potential site lacks fiber optic infrastructure, data center developers can efficiently and cost-effectively extend fiber to the location, provided there is available space in the public right-of-way for installation.
How to Lease Government-Owned Property for Data Centers
LandGate assists government and public landowners with leasing properties for data centers. Our marketplace allows government agencies to advertise available properties for lease directly to a wide network of data center developers actively searching for suitable properties. If you're interested in discussing the potential of your agency's specific properties to be leased for data center development, book a call with the government team at LandGate here:
