A new data center tax incentive program that went into effect on September 1 will enhance Texas’s already favorable economic climate for corporations looking to move to or increase their business within the state, according to a new report titled, “Data Center Incentives: Strengthening Texas’s Competitive Advantage,” released by CBRE Global Research and Consulting.
Within the last five years, IP traffic has more than quadrupled and will continue the upward momentum as the need for businesses to store, manage and distribute information and network traffic grows.
“The data center site selection process is a complex evaluation that incorporates cost, risk and reliability for the end user. Power cost, low natural hazard risk, and access to fiber are drivers as users look to select their solution,” said David Liggitt, vice president and member of CBRE's Data Center Solutions Group. “In addition, understanding a market’s tax abatement and incentive opportunity continues to rise in importance as states compete aggressively for data center projects.”
In order to attract data center investments, about 17 states have passed similar incentives programs to attract data centers, according to John Lenio, Economist and Managing Director of CBRE’s Economic Incentives Group. “Some states have implemented new tax incentives programs to attract the significant capital investments that come with data centers. While they do not create a lot of jobs, data centers still have a significant economic and fiscal impact on a State and community. For example in Texas, a data center with a $500 million capital investment creates the same impact as a 500-job corporate headquarters.”
In addition to the favorable business tax structure, the new legislation in Texas will add to the state’s existing features of relatively low cost power, robust fiber infrastructure, large and well-educated work force, low cost of living and affordable real estate.
Citing the “Data Center Incentives: Strengthening Texas’s Competitive Advantage” report, Sara Rutledge, director of research and analysis for CBRE and the author of the report, says that “the new data center incentive program strengthens Texas’s competitive advantage in data center location decisions.”
To view the full report click here.