Advantages of the Hillsboro Market for Data Center Colocation
5 min read
The Hillsboro-Portland data center market is rapidly expanding as companies discover its many advantages. The region has relatively low property and energy costs, a favorable climate, network density, and government support in the form of tax incentives. Any business looking for a west coast market should seriously consider placing their servers in Oregon.
Oregon, home to the renowned Silicon Forest, has a fast emerging data center market within Hillsboro. Over the past few years, it has developed tremendously and managed to attract some major data center companies within the industry. The region’s lucrative tax breaks, network density, strategic location, optimal climate, and low energy costs all contribute to its appeal as an attractive market for data center colocation.
The city of Hillsboro is poised to become a new data center hot bed. It’s 15 miles from Portland and is part of a metropolitan area that benefits from a thriving semiconductor sector. The tech industry has been active within Oregon since the 1940s. Continuous growth over the years contributed to an extensive infrastructure, capable of supporting multiple data centers and tech companies. Intel, the state’s largest corporate employer, is largely responsible for transforming the technological landscape within Hillsboro and surrounding areas. With large power and space needs for fabrication, they created critical mass for the same infrastructure that supports data centers.
As recently as February of 2019, they revealed intentions to construct a massive facility in Hillsboro to adjoin two existing factories known as D1X. This latest addition is said to be one of the largest capital projects in Oregon history, totally eclipsing their previous ventures. These semiconductors will eventually power the servers in data centers that are built to use the same power and connectivity infrastructure. Major data center providers such as Digital Realty, Flexential, T5 and Equinix have also been capitalizing on this emerging market.
Quite notably QTS announced their plans to build a massive 100-megawatt data center in mid 2018. Their 92-acre facility is estimated to consume more than twice the amount of electricity of all the homes in Hillsboro. In 2019, Flexential also announced plans for a new facility near their existing data centers that will bring their footprint in the market to more than 500,000 gross square feet. Newcomers OVH have recently set up a vast 112,000 square foot data center for cloud and web hosting. These new developments all help to bolster the data center industry in Oregon and increase its appeal among small and enterprise-class colocation businesses, deepening the ecosystem in a positive feedback loop.
Companies are seeking to establish a presence within the region due to several factors. One of the main reasons is the generous tax breaks. These opportunities are available in specified Enterprise Zones throughout the state. With no sales tax and a property tax abatement for up to five years, businesses can save millions of dollars in startup and operational costs.
This was a major catalyst for the influx of new tech investments into Oregon. It’s important to note that some amendments were made to the policy in 2016, which now require the value of these tax breaks to be linked to jobs created. Nevertheless, for mega companies that may spend large sums of capital to outfit their facilities, these tax breaks can quite lucrative. It is estimated that Intel received a tax exemption worth nearly $200 million in 2018.
Oregon’s geographical location also provides a number of unique advantages. When compared to markets like Washington or California the property costs are inexpensive. There is also access to renewable forms of energy such as solar, wind and hydropower. This helps to significantly reduce energy costs, which is a major consideration for any data center. The location has a relatively low risk of natural disasters, with less seismic threat than California and an amenable climate that is naturally cool.
An increasing number of companies are also being drawn to the market because of its robust connectivity. Portland serves as a gateway between Silicon Valley and greater Seattle, thereby allowing network accessibility to both markets and the growing data needs in the Pacific Northwest. The Hillsboro Data Center Ring links more than 21 carriers, which helps to boost network efficiency and reduce service costs. This ring connects to several transpacific subsea cables, which are vital for future expansion and extended reach. There is an increasing demand for access to Asian markets. As businesses require more connectivity with regions like China, Japan and South Korea, the Oregon coast appears to be well positioned to bridge that gap.
The region has more subsea cable connections than Washington, even with more of these transpacific communication routes under development. In 2018, Google, Facebook and Pacific Light Data Communication collaborated to build the Pacific Light Cable Network which will be capable of producing 144 terabits per second once brought online. It will bridge a direct connection between the US and Hong Kong. This is just one of many undertakings in progress at the submarine level.
For companies that are seeking an area with the capacity for expansion and access to Asian markets, the Oregon coast stands out. Its strategic position allows it to facilitate terrestrial and submarine networks. In time, we expect to see even more growth in Portland, Hillsboro, and Oregon on the whole. Inexpensive property costs, strong tax incentives, green energy, favorable climate, and network density make it one of the most cost-effective locations for data centers in the Pacific Northwest.
Find the right colocation data center in the Portland-Hillsboro market to meet your needs using our data center sourcing and pricing tool or contact an advisor to develop a hybrid solution that includes Oregon colocation.