Oregon Lands A Silicon Valley Fortune
Submitted October 20, 2011, 10:35 PM
San Jose-based Fortune Data Centers has acquired 15 acres and a 240,000 square-foot industrial building for the construction of a 7.8-megawatt speculative development in Hillsboro, Ore., a Portland suburb.
Fortune has already invested more than 55,000 man hours into the project and expects the first phase to be complete, including commissioning, by the second quarter of 2012. It is the first venture for Fortune outside of its Silicon Valley base, where it owns and manages a more than $100 million, 78,000 square-foot data center where Facebook Inc. leases the largest share.
Jill Miles, national recruitment officer for Business Oregon, the state’s economic development arm, said beyond the Fortune and Digital projects, the state has nine others that are completing due diligence. “I have had 25 communities respond to owner-users and developers who are interested in building data centers,” she said. Activity has accelerated in the sector in Oregon since late 2009 or early 2010, she said. Facebook and Google both have data centers in the state.
While data centers in general cost approximately $10 million a megawatt to build, the cost of what goes inside the building is magnitudes greater. The absence of a sales tax has huge dividends for users of all types of data centers because it eliminates a substantial cost on top of the purchase price of the equipment. In addition, companies typically replace, or “refresh,” their data center IT equipment every three to five years, meaning the sales tax would have to be paid again.
Matt Mochary, chief executive of Fortune Development Group, an independent but related company to Fortune Data Centers, said the information-technology equipment that goes inside a data center, including servers and networking devices, can cost as much as $45 million a megawatt for a so-called enterprise data center. Such a center would be reserved for internal use by a company and might be called upon to do complicated information and data processing. Equipment for a data center for Internet applications or external access, such as company’s webpage, is closer to $20 million a megawatt, he said. A megawatt is a million watts of electricity.
“When you click on a website, you are not asking it to make massive calculations, you are asking it to show you a picture,” Mochary said. The calculating power for that kind of command is far less intense.
John Sheputis, chief executive for Fortune Data Centers, said the company evaluated numerous locations before deciding Hillsboro was its best bet: “We looked at a lot of markets from Texas all of the way to the West coast, and we spoke to a lot of people all along the way.”
The Oregon tax incentives have been in place for at least 15 years, Miles said, and were not created with data centers in mind. Besides the absence of a sales tax, when a data center is built in one of the state’s enterprise zones, it receives a minimum of three years of property tax abatements that apply to both real property improvements, such as buildings, and business personal property. Rural communities are allowed to offer abatements on business personal property for up to 15 years, she said.
The incentives are also proving popular to solar equipment manufacturers. Solar panel maker SolarWorld AG is investing more than $400 million in its new Americas headquarters, also in Hillsboro. The company touts the area’s “clean hydro-electric power” and “trained high-tech workforce” as two additional reasons for its location there, according to its website.
