Dallas Colocation & Data Center Market

The Dallas data center market has been hot. Low power costs, robust interconnection market, tax incentives, and low hazard risks have attracted large data center deployments.

Dallas Interconnection

Dallas is the best-connected metro in the South Central US. The Informart at 1950 Stemmons is the primary point of interconnection followed by 2323 Bryan, a 26 story downtown tower. Equinix, a retail colo provider focused on Interconnection ecosystems, acquired the Infomart for $800 million in 2018.

Infomart Colocation

Infomart at 1950 N Stemmons is the pivotal colo facility in Dallas. Not only does is it contain the main peering point in the region, but many other colo providers are in the building as well. Equinix acquired the building in 2018 and runs the Meet-Me Room (MMR) The following companies also provide colocation services in the building:

• Cologix DAL1 and DAL2 jointly have 40,000 sqft
• Flexential operates the former Viawest data center
• Zayo (aka zColo)
• Atlantic Metro

Other Dallas Colocation Facilities

• 2323 Bryan, a Digital Realty owned telecom hotel. Similar to the Infomart, the site has many colo providers. in the building including, Earthlink, Equinix, CyrusOne, and Atlantic Metro.
• Digital Realty - 9 sites
• CyrusOne - 3 data centers
• QTS - 2 large data centers
• QuadraNet is in the Tierpoint facility at 3004 Irving
• DataBank has 3 data centers. DFW1 in the Former Federal Reserve Building. DFW2 in Richardson has 42,000 sqft of raised floor. DataBank’s newest facility, DFW3, is in Plano

Wholesale Options:

There are many good wholesale choices in the market, including Digital Realty, CyrusOne, QTS, T5, Raging Wire, Skybox, and Stream.

Electric Utility in Texas:

The Texas electrical utility is decoupled from the East/West power grids in the US, the only state to manage their own grid. The grid is managed by the Electric Reliability Council of Texas (ERCOT.) Further, in 2002, Texas deregulated its energy industry creating a competitive market. The cost of electricity ranges from $0.04/kwh to $0.007/kwh.

Hazardous Risks are low:

Dallas is a relatively low risk from natural disasters. However tornados are sporadic, but a persistent risk in the summer.

Tax Incentives:

The state of Texas has exempted state sales tax (of 6.25%) for qualifying software and hardware purchases for data centers. The exemption does not cover local sales taxes. The State exemption also includes use tax for electricity consumption. The tax exemptions are intended for large data center deployments and to qualify, the data center must meet specific requirements. For example, capital expenditures must exceed $200 million over 5 years and create at least 20 permanent local jobs.

Google's Pioneering Location in Midlothian

There are no other data centers within 15 miles of Google’s Midlothian Data Center location which is under construction. Most of the data center development in the Dallas metro is either in Dallas itself or to the North (Plano, Carrolton, Richardson, and North Fort Worth.)

Google is a data center pioneer in the South. From the perspective of electrical supply, it might prove to be a smart decision. As the high-growth data center industry clusters in the North metro area, Google has chosen to colocate its data center next to a slow growth, but high electric consumption industry.

Data center clusters encourage network fiber buildout. That is a disadvantage to be the only data center in a region. However, the site is built along a rail line and with Google's size and clout, it will by itself encourage enough fiber development.