We’ve seen the major impact that corporate campuses and offices of companies like Amazon, Google, and Apple can have on their surrounding commercial real estate markets. With these locations, typically comes an influx of new job opportunities, and therefore an influx of new residents—many of which are well-compensated and seek to live in or nearby the city of that corporate location.

Corporate campuses and offices inject people and wealth into local economies, typically causing growth in demand for commercial properties in the immediate and surrounding markets. Amazon’s influence on Seattle is perhaps the best example of this.

So then, what about the very prodigious data centers of these tech conglomerates?

Considering the drastically different building, land, and employee requirements of these centers, it is hard to know whether they have the same commercial real estate needle-moving power of corporate campuses.

Impact of Google Data Centers

There is no doubting the overall importance of the six active U.S. Google data centers. They are home to all of the computer systems and digital inventory needed to make Google the tech conglomerate that it is. Without these centers, Google’s services would not be possible.

With the help of Oxford Economics, Google outlined the impact that their data centers have already had on the national economy and communities in which they’re located, in terms of both revenue generated and overall jobs created. According to their April 2018 report, their data centers generated roughly $1.3 billion in economic activity, and created 11,000 jobs in 2016 alone.

The impact of these centers on nearby commercial real estate is a bit murky, however.

The data centers themselves typically exist in very small markets, most of which are close but not adjacent to large cities. Given the size of these markets, the impact of each data center should not be difficult to measure.

Using Reonomy data, we’re going to take a look at the six currently active U.S. Google data centers and the counties they are located in, to see how much of an impact they have had on nearby commercial real estate since opening—broken down into the good, the bad, and the indifferent.

Google data centers are currently in the following counties:

The Good

Wasco County, OR

Wasco County Google Data Center


City/Town:
The Dalles, Oregon
Year Opened: 2006
Total Investment to Date: $1.8 billion
Nearest City: Portland, Oregon (80 miles)
Current County Population: 26,437

The Wasco County data center, located in The Dalles, Oregon, is one of the first two U.S. Google data center locations, along with Douglas County, GA.

In both of these locations, the total commercial sales volume and average sale price dropped following 2006. While this is most likely due to the recession of 2008, it could also be the comedown from the initial investment push in these areas leading up to the opening of the data centers, given their unknown value at the time.

Reonomy Wasco County Commercial Sales

Regardless, more recently, things look much brighter for Wasco County real estate. There has been a very large uptick in commercial sales volume in recent years, going from 28 in 2012, to 187 in 2015, a 567.8% increase in just three years.

It is also unlikely that The Dalles is under the influence of the nearest city, Portland, as it sits roughly 80 miles away. Overall, the market in Wasco County is trending upward strongly.

 

Douglas County, GA

Douglas County Google Data Center


City/Town:
Lithia Springs, Georgia
Year Opened: 2006
Total Investment to Date: $1.2 billion
Nearest City: Atlanta, GA (20 miles)
Current County Population: 143,882

As previously mentioned, Douglas County, GA was the other data center location that opened in 2006.

Douglas County commercial real estate shows a similar story to that of Wasco, only on a more gradual, steady scale. Following the financial crisis of 2008, the number of total commercial sales increased threefold, going from 582 in 2009, to 1,749 in 2013.

Douglas County Google Data Center

Furthermore, the county saw a heightened rate of population growth in the years leading up to the recession. From 2003 to 2008, the number of residents grew by 26%. The subsequent rise in commercial property sales is likely a combination of the county catching up to its own population growth, coupled with its consistently low sales prices.

Strangely enough, in 2017, sales prices dipped even further, equaling the second lowest yearly average since the data center was opened. As long as the average sales price remains low, sales volume will likely remain high.

 

Berkeley County, SC

Berkeley County Google Data Center

City/Town: Moncks Corner, South Carolina
Year Opened: 2008
Total Investment to Date: $1.8 billion
Nearest City: Charleston, South Carolina (20 miles)
Current County Population: 217,937

Google opened four more data centers in the U.S. in 2008, one of which sits on a 500+ acre piece of land in Berkeley County, South Carolina.

Berkeley County has seen varying rates of growth in the time since Google’s opening. Total number of commercial property sales remained consistent from 2008 to 2015, then doubled in the next two years, reaching 4,452 in 2017. That same year also saw a total average sale price of about $1.5 million.

Berkeley County Google Data Center

In this case, while Berkeley County has seen tremendous growth in the last year or so (the most in the Charleston area), much of that could be due to growth (i.e. rising prices) in Charleston and Charleston County.

Given Berkeley’s close proximity to the city, new residents may be flooding the area as a cheaper alternative to Charleston County, feeding heavier commercial real estate investment. Nonetheless, Berkeley County’s commercial real estate market is furiously pushing forward.

The Bad

Caldwell County, NC

Caldwell County Google Data Center


City/Town:
Lenoir, North Carolina
Year Opened: 2008
Total Investment to Date: $1.2 billion
Nearest City: Charlotte, North Carolina (75 miles)
Current County Population: 81,981

The story for Caldwell County is a bit more gloomy. Since the county’s data center opened in 2008, both total commercial sales volume and average sale price have plummeted, with the number of commercial sales falling into the single digits in 2014, down from 268 just two years prior.

Caldwell County Google Data Center

Despite a fairly prominent increase in number of sales since 2014, the decade long trend still shows an overall decrease in sales volume. While it’s hard to attribute this negative trend to Google’s data center, the opening of that center certainly has not done the county much favor.

Caldwell County sits about 75 miles outside of Charlotte, as well, giving the county a more bleak outlook than others.

The Indifferent

Pottawattamie County, IA

Pottawattamie County Google Data Center

City/Town: Council Bluffs, Iowa
Year Opened: 2008
Total Investment to Date: $2.5 billion
Nearest City: Omaha, Nebraska (Adjacent)
Current County Population: 93,386

Pottawattamie County is perhaps the most indecipherable of the lot. On the whole, total sales volume and average sale price have remained consistent in years of having a Google data center.

The only major deviation comes in 2016, where the average commercial sale price skyrocketed due to a $44.3 million multi-property sale, which skewed the results quite a bit.

Pottawattamie County Google Data Center

The fact of the matter is, despite Council Bluffs, Iowa sitting right outside of Omaha, Nebraska, the city has not seen any type of needle-moving in the time since Google’s data center opened.

 

Mayes County, OK

Mayes County Google Data Center

 

City/Town: Pryor, OK
Year Opened: 2008
Total Investment to Date: $2.0 billion
Nearest City: Tulsa, Oklahoma (45 miles)
Current County Population: 40,921

When looking at Mayes County commercial real estate trends since 2008, aside from a sizable multi-property sale in 2012, the numbers show, well… Not much of anything.

Mayes County Google Data Center

While this market is not rapidly in decline, it’s also not growing, remaining steady, again showing that perhaps Google’s data center has not had much of an impact on the county’s commercial real estate market.

Not a Singular Force

Google has two more U.S. data centers in the works, both of which broke ground in 2018. One is located in Jackson County Alabama, and the other in Montgomery County, Tennessee.

When looking at the commercial real estate sales trends of counties in which data centers already exist, however, it does not appear that these centers actually have much of an impact on nearby commercial real estate, if any impact at all. They’re not the singular transformative forces that corporate campuses can be.

While these data centers serve a tremendous overall benefit to the national economy and job growth, interestingly enough, the land and property requirements paired with the number of jobs it creates for local residents doesn’t translate much to the commercial real estate demand within that market.

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