Life without technology is hard to imagine. It’s a part of nearly everything we do, yet few people consider the infrastructure behind it, namely, data centers.
We’ve all heard of the mysterious “cloud,” but contrary to how we might imagine it, it is not white or fluffy, but rather a physical facility that centralizes an organization’s information technology operations and equipment for the purposes of storing, processing and disseminating data, according to Palo Alto Networks.
Though relatively new, the data center market has become one of the hottest sectors in the last few years to account for the growing needs of tech giants like Google, Amazon, Apple and Microsoft. They’re popping up left and right, and many of these companies, specifically Microsoft, have their sight set on one region: Chicagoland.
In 2021, Microsoft started construction on a three-building project on 37 acres within the Elk Grove Technology Park and received approval for another in neighboring Hoffman Estates, representing a $450 million investment into the community.
Microsoft’s Hoffman Estates project was first approved by the Village Board in May of 2021, and the Village of Hoffman Estates began working with them shortly after on a site plan that would be home to two, 200,000-square-foot buildings. Construction of first building was just completed, while finalization of the building’s interior and work on the second building will continue into 2023 and 2024.
But why are big tech/e-commerce companies prioritizing markets like Hoffman Estates when it comes to these assets?
Kevin Kramer, Director of Economic Development for the Village of Hoffman Estates, said there are a few key elements to consider when selecting a site: fiber, as optimal connectivity depends on multiple redundant fiber connections; power; water for the cooling system; and a healthy legislative environment, as is the case in Hoffman Estates.
In 2019, the State of Illinois adopted an incentive program making it attractive for data centers to come to Illinois and this year exceeded $3 billion dollars-worth of data center investments.
“When companies see the state is incentive-friendly, that attracts attention from other data centers,” Kramer said. “Locally, Hoffman Estates amended its zoning ordinance to make these facilities a permitted use in our manufacturing and office districts, making it even easier for companies to get the go ahead to start construction, which signals our desire to see this use in our community.”
Submarkets like Elk Grove Village and Hoffman Estates also have open space which is ideal when planning projects to this scale.
Simply, the facilities are mutually beneficial to both parties, which is the reason the region continues to push for them. Data centers diversity the economic landscape and provide significant revenue while requiring little from the municipality they’re located in.
“We’ve already seen about $5 million dollars in permit tax revenue,” Kramer said. “After our two buildings are fully completed and occupied, we’re expecting another $1 million dollars per year from the electricity tax alone.”
Each asset type (i.e., retail, multifamily, etc.) is uniquely beneficial for a community’s economic growth, though Hoffman Estates is reportedly earning more profit from this project than they would from a different asset like single-family home subdivision, in that the latter would more frequently require municipality services.
In a statement shared in the Hoffman Estates Citizen, Mayor of Bill McLeod said: “We’re excited to welcome Microsoft to Hoffman Estates, and we know they will have a positive effect on our community. Our police and fire departments won’t be called to the site very often, for example, but the company’s contributions to our community could help our departments buy life-saving equipment to better serve our residents.”
The project will also provide nearly 300 construction jobs over the multi-year buildout and the completed facility will create the need for a highly-skilled labor force, with about 40–60 high-paying positions onsite.
In fact, they’ve proven so valuable to the community, Kramer is hoping for more, and it’s looking like it will happen sooner than later.
In addition to the original 53-acre plot, Kramer said Microsoft recently purchased the adjacent 30 acres, though plans for the new parcel have yet to be revealed.
And while Microsoft is the first big tech company to establish a presence in Hoffman Estates, the Hoffman Estates Citizen reported that smaller technology companies will benefit from Microsoft’s plans to offer colocation, or “colo,” which enables tech enterprises to rent space for servers and other hardware to meet their technology needs so they can continue to grow.
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