PORTLAND, OR—Portland is among the least expensive markets for constructing, commissioning and operating a 5-megawatt (MW) enterprise data center over a 10-year period.

Portland's advantage is driven by its favorable tax environment for enterprise data centers and its low power costs, according to a new report from CBRE Group, Inc.

The CBRE study modeled the cost of constructing, commissioning, and operating a 5 MW data center for 10 years across 30 US markets, and categorized markets into three cost bands (low, moderate and high) according to analysis of specific cost components including tax incentives, power, construction, land and labor.

"The attractiveness of the Greater Portland/Hillsboro markets—and more broadly the State of Oregon—is reflected in the robust activity across enterprise, wholesale and retail colocation markets this past year," said Ajay Malhotra, a vice president in CBRE's Data Center Solutions & Technology and Media practices. "We expect enterprises with large data center requirements—along with tech companies looking for talent—to continue to keep Oregon high on their short-list of destination markets."

· Tax Incentives: Data centers are capital intensive and generate significant sales and property tax revenues for state and local jurisdictions. Increasingly, markets that seek to attract data centers are offering significant tax incentives to help reduce the total cost of operations for data centers. The CBRE report found that Portland's net tax burden ranked as the second lowest in the study, accounting for 2.7% of the total project cost, well below the 8.7% average total project cost across the 30 markets.

· Power: Portland ranked in the lowest cost band for power rates in the study. At 11.9 percent, Portland had the ninth-lowest power costs as a share of the total project cost among the 30 markets in the study. Power costs average 13.2%t of the total project cost over the life of the project, but vary from 6.5% in Quincy, Washington, to 21.3% in Boston.

· Construction Costs: Portland was a moderate cost market for construction costs, ranking as the eleventh-most expensive market in which to build a Tier III facility. At 39.3%, its facility construction costs as a share of the total project cost were above the 35% average share across the 30 markets in the study, although the elevated percentage reflects the minimized impact of the other cost factors in which Portland scored well.

· Land Costs: Portland's land acquisition costs as a share of the total project cost were ranked eighteenth of the 30 markets in the study. However, at 1.8%, Portland was still below the 2.5% average share of the total project cost across the 30 markets.

· Labor: With a need for critical environment engineers that provide round-the-clock coverage, labor costs average $13.2 million over a 10 year-period and account for an average of 4.9% of the total project cost. Market-rate labor costs were slightly above-average in Portland, yet at 5.1%, still ranked as a moderate-cost market for total project cost among the 30 markets.

"The ever-increasing need for data exchange, storage and security is broadening demand for data centers in the U.S., but one solution does not fit all," said Pat Lynch, managing director, Data Center Solutions, CBRE. "Capital and operating costs vary considerably by market, and non-monetary factors such as proximity to a headquarters location, fiber density and environmental and other risk factors can also drive enterprise site selection decisions."

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