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Data Storage: Digital’s Other Industrial Demand Driver
E-commerce isn’t the only product of the digital world that’s fueling demand for industrial space. The increasingly connected world is fostering accelerated demand for data storage, making data centers a mainstream property type within the industrial sector, says Marcus & Millichap’s National Office and Industrial Group in its latest outlook report.
Just as they require massive amounts of warehouse space to store inventory, e-commerce companies—along with tech giants such as Facebook, Google and Microsoft—also rely on massive amounts of tracked data. This has led them to set up data storage operations.
Many states now incentivize data center development with significant tax breaks. From the standpoint of state governments, these projects create new full-time jobs and potentially generate additional employment through technology-related development.
“In 2009, only seven states provided incentives, but now 30 states offer inducements for large data center projects,” writes Marcus & Millichap’s Brandon Niesen. Much of this stems from the high costs of these developments compared to other industrial projects, since proximity to fiber optic lines and power grids is essential, putting a premium on required land.
Further, Niesen writes, the rapid expansion of data centers is “piquing the interest of investors, offering them additional investment opportunities and providing them a viable portfolio diversification option amid the maturing cycle.”
Pictured: A Facebook data center campus in New Albany, OH.
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