Columbus OH Among Nation's Top 10 Data Center Regions

The Columbus area is adding data centers so fast that it now has become one of the top 10 regions in the country for them.

A new report finds that data center space increased 146% over the past 10 years in central Ohio.

The 1.9 million square feet of space added here between 2012 and 2021 trailed only Washington, D.C., and Dallas over that period, according to the report from 42Floors, a commercial real estate listing service. The region now has 4.6 million square feet of space for data centers, ranking ninth among the country's metro areas. Washington, D.C., is No. 1 with 25.5 million square and Dallas is second with 14 million square feet. Columbus is behind only Chicago and Omaha, Nebraska, in data center space in the Midwest, and has added more space than both of those metro areas over the last decade.

About 40.5 million square feet of new data center space was added from 2012 through 2021 across the locations that 42Floors surveyed. Data center space in those locations increased from 121.5 million square feet in 2012 to 162 million square feet through 2021, the report found.

Columbus becoming a a major data hub

The Columbus region has become a hub for cloud computing, offering fiber networks that reach major cities on the East and West coasts, according to companies that have developed data centers. In addition, the region has a favorable climate for data centers, with little risk of flooding, earthquakes or tornadoes compared with other regions.

There are ample supplies of electricity and labor as well.

The report actually may underestimate just how strong growth has been in the Columbus area, said Eric Bell, founder of Baxtel.com, a site that track data center development.

"Columbus has grown a surprising amount," he said.

Baxtel's site shows Columbus has 40 data centers to 21 for Cleveland and 16 for Cincinnati. By power use, however, the Columbus area dwarfs the other Ohio cities, with 314.1 megawatts used compared with 43.7 in Cincinnati and 22.4 in Cleveland.

"Power is just a better way to measure the size of the data center industry," Bell said. "Everything is a function of power. "

Are Ohio tax incentives driving expansion?

42Floors credits accessibility to reliable power, relatively affordable land and low incidence of natural disasters for the boom in Columbus-area data centers.

But the growth also coincides with a sales tax exemption for equipment used in data centers put in by the state. The state offers the incentive to projects that have an investment of at least $100 million in a three-year period and annual payroll of at least $1.5 million.

While there were data centers here already, Amazon's decision in 2015 to build data centers in New Albany, Dublin and Hilliard started a run of announcements of major name-brand projects in central Ohio that continue today.

Amazon's decision was followed by Facebook parent Meta and Google. All three companies have announced expansions, and Google said a year ago that it will build additional data centers on the Hartman Farm off South High Street and in Lancaster.

"Google is proud to call Ohio home," said Amber Tilman, head of data center economic and community development for Google. "Columbus is a growing economic and cultural hub in the United States and it's a great place not only for our business, but for our employees to work and live. This community is vibrant, diverse and ready to lead Ohio and the U.S. into the next generation."

In June, real estate companies Lincoln Property and Harrison Street has bought 190 acres in New Albany that it plans for data centers and industrial use. And in September, the Washington, D.C.-company DBT-DATA said it plans to invest at least $1 billion to build data centers on 93 acres it purchased near the Intel site in New Albany.

Are data centers worth the tax break?

Initially, the amount of tax dollars the state lost from the incentive was minimal, but it has soared to about $70 million a year in recent years, according to state budget documents.

The liberal-leaning Policy Matters Ohio has objected to the tax break along with many others that it says cost the state money that could be better spent on improving services.

"Some of the world’s biggest, wealthiest companies have been winning state sales-tax breaks worth tens of millions of dollars for new data centers," the organization said in a 2020 report. "In 2015, Amazon was awarded such breaks estimated at $77 million over time. Google is getting $43.5 million and Facebook $37 million, each for new data centers in New Albany. These incentives exempt them from sales tax on purchases of hundreds of millions of dollars of equipment and extend over decades."

The report also noted that the data centers don't create many jobs. Bell from Baxtel says tax breaks are an important factor in the decision by companies on where to build data centers.

Data centers house servers that store information, photos, videos, emails and other material. There are rows and rows of computer equipment. "More and more states and municipalities are approving incentive packages for data centers," Bell said.

The companies spend tens of millions of dollars every year refreshing that equipment, and that's why the sales tax abatements are important, Bell said. "There always will be a voice like that," he said of the concerns raised by Policy Matters.

Eventually, the tax breaks will expire and the state will get the full benefit of the what the companies are spending on new equipment, he said. And while there may not be many jobs at data centers, they pay well and the workers tend to be among the highest paid in the communities where data centers are located, he said.

The biggest Central Ohio data centers by square feet:

Meta (Facebook), 1 Community Circle, New Albany -- 970,000 Amazon, 2570 Beech Rd., New Albany -- 459,000 Amazon, 5109 Hayden Run Rd., Hilliard -- 318,464 Amazon, Crosby Business Park, Dublin -- 318,448 Google, 1101 Beech Run SW, New Albany -- 275,000 Citi, 306 Greif Parkway, Delaware -- 271,562 Spirit Realty Capital, 4499 Fisher Rd., Columbus -- 205,339 Amazon, Crosby Business Park, Dublin -- 159,244 Amazon, Crosby Business Park, Dublin -- 159,244 Cologix, 555 & 575 Scherers Ct., Columbus -- 155,000

Source: 52Floors