Microsoft data center expected to lure others to San Antonio

Web Posted: 01/19/2007 08:57 PM CST

L.A. Lorek
Express-News Business Writer

To see the possible effect of Microsoft Corp.'s proposed $550 million data center in Westover Hills, just take a look at what has happened to Quincy, Wash.

The town of 5,200 residents in Central Washington, known primarily for its crops of potatoes, sweet corn, onions and grapes, has become a high-tech boomtown following Microsoft's decision last year to build its first massive data center there.

"It's diversified our economy," said Pat Connelly, past president of the Quincy Valley Chamber of Commerce.

Since Microsoft came to town, Internet search engine Yahoo and software maker Intuit Corp. have selected Quincy for 180,000-square-foot and 120,000-square-foot data centers, respectively.

"When one comes, two or three come," Connelly said. "They try and follow each other."

The entire area has become a hotbed of data center activity.

Nearby, Ask.com is building a data center in Moses Lake and Seattle developer Sabey Corp. is building a $100 million independent data center in East Wenatche. Google built a huge data center in The Dalles, Ore., about 150 miles away.

"We've seen land values triple, which is going to have kind of a negative effect for everyone else," said Tim Snead, Quincy's city administrator.

The positive effect is that Quincy has always had a housing shortage, and since the data center boom developers have announced plans for 1,000 new homes. The data centers employ relatively few workers, but Quincy hopes to get more jobs from support businesses, Snead said.

Unlike San Antonio, Quincy did not offer any incentives to lure Microsoft or any of the other data center companies there. Neither did the state.

"It was nothing that we went out and recruited," Connelly said.

San Antonio gave Microsoft a 10-year tax abatement and approved the use of $5.2 million from the CPS Energy economic development fund.

In Central Washington, data center companies like the area's hydroelectric power supplied by local utility companies as inexpensively as 1.5 to 2 cents per kilowatt-hour, Snead said. Microsoft's Quincy center will use about 48 megawatts of electricity annually. The San Antonio center will use roughly 44 megawatts.

That compares to the national industrial electric rate of nearly 9 cents, according to the Edison Electric Institute based in Washington, D.C.

At a news conference following Microsoft's announcement, Milton Lee, chief executive officer of CPS, would not disclose San Antonio's industrial rate, but said it's extremely competitive and that's one of the reasons Microsoft chose to locate here. According to the Public Utility Commission of Texas, CPS' commercial rate is about 5.4 cents per kilowatt- hour based on the use of 15,000 kwh.

Microsoft's data center in Quincy, roughly the same size as the 470,000-square-foot structure planned for San Antonio, will go live next month, said Mike Manos, senior director of Microsoft Data Center Services. Microsoft, whose Redmond headquarters is about 160 miles from Quincy, eventually plans to build 1.5 million square feet of data center space in Quincy in six buildings. Manos said the company has a prototype for its data centers, but he declined to reveal details for competitive reasons.

Most data centers resemble giant warehouses housing tens of thousands of computers with massive air conditioning units, large backup generators and the latest high-tech security features. Some of the fortress-like structures have foot-thick walls, biometric access controls and remote monitoring systems.

Turner Construction Corp. is building the Microsoft data center in Quincy. Microsoft has not yet selected a construction company for the San Antonio project, Manos said. It expects to start construction within two months and finish within two years.

The data center clustering effect happening in Central Washington is what San Antonio officials hope will happen here.

The cluster has begun forming.

Lowe's is building a 100,000-square-foot data center in Westover Hills. At least two or three other projects are looking at the city for data centers.

Westover Hills developer Charles Martin Wender is selling 44 acres to Microsoft at 5150 Rogers Road.

Wender predicts Microsoft will attract more data center projects to the area and create a healthy cluster of information technology jobs.

San Antonio already has a solid base of home-grown company data centers, including Rackspace Managed Hosting, Wachovia, Capital Group Cos. and USAA.

Web Posted: 01/19/2007 08:57 PM CST, L.A. Lorek, Express-News Business Writer