The Boston Data Center Market

The Boston Data Center Market

Boston is a data center market that traditionally attracts regional users because of the attributes of the city. Boston is attractive to companies because it's one of the largest cities in the Northeast and has the ninth largest economy in the US, which creates a geographic area with a competitive colocation market. Boston is situated within 500 miles of major areas like New York, Northern New Jersey, Northern Virginia, Philadelphia, Toronto, and Montreal, and is a termination point for an undersea cable running directly to the UK and Ireland. Boston also has a highly diverse and healthy economy, with twelve Fortune 500 companies headquartered there, and an unemployment rate of 4%, under the 4.3% national average. Influential educational institutions like MIT and Harvard have also helped Boston become one of the world’s leading cities in biotech research.

Data center development in Boston occurs in both the downtown area and outer suburbs of the city, a trend found in other US data center markets as well. Because downtown areas are typically rich in both power and fiber infrastructure, certain buildings in these areas offer shell lease opportunities for datacenter providers and users. Downtown Boston is home to Markley’s massive carrier hotel, a 920,000 sf building offering both colocation and cloud. This building also provides access to over 80 network providers and the Boston Internet Exchange. Cogent, CoreSite, and INAP all operate facilities located on Innerbelt Road, which is in close proximity to the downtown area as well. Providers like Digital Realty and CenturyLink are located further out in the surrounding suburbs, primarily in Waltham, Needham, and Burlington. Digital Realty is the largest data center operator in Boston, with 20 MW of commissioned power spread across the three facilities they own in the Boston market.

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Power Overview

The energy market in Boston experienced deregulation in 1998, providing residents the ability to choose their power provider. Eversource Energy is the Northeast’s largest power provider, delivering power to over 3.5M users in the Northeast United States. Boston’s power cost for data center users is expensive when compared to other competitive markets. While the rates vary based on location, with higher rates downtown, most colocation providers in the area report a power cost in the 15-20¢/kWh range.

Tax Incentives Overview

Boston has no standard data center tax incentive. However, incentives can be granted on a case-by-case basis, with some operators negotiating incentives based off the merits of their data center project. For example, the Markley Group was able to negotiate a twenty-year personal property tax exemption for their facility in Lowell.

Hazard Risk Overview

Boston’s climate is relatively stable, with a low risk of tornadoes and earthquakes. During specific times during the year, a risk for hurricanes and Nor’easter storms is common for the area. At extreme times, Boston can experience flooding as a result of these storms. The city also deals with occasional blizzards in the winter season.

Boston DATA CENTER MARKET OPTIONS

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