Data centers may help unlock the new Nevada economy

In order for the new Nevada economy to mature, the state needs more data centers, experts say.

Gov. Brian Sandoval has selected nine industries to target for growth: aerospace and defense, agriculture, information technology, energy, health care, manufacturing, logistics and operations, mining and gaming, hospitality and tourism.

All those industries increasingly rely on big data — drones equipped with sensors are increasingly being used to help detect the health of crops, for example — and all that data will need a physical home.

“Data centers are the brick and mortar of our fast-growing digital economy,” said Jeff West, head of data center research at commercial real estate services provider CBRE.

Steve Hill, the outgoing director of the Governor’s Office of Economic Development, said he’s confident that the needed data center capacity will emerge locally to support the envisioned economy.

But “that industry is going to have to grow pretty quickly,” he said.

Current capacity

Las Vegas has about 1.32 million square feet of data center space from 13 providers, according to Dan Thompson, senior analyst at 451 Research.

But one provider, Switch, owns an estimated 90 percent market share.

“While Switch is growing in the Las Vegas market, it is not necessarily growing because of that market. We estimate that only about 12 percent of Switch’s business is from companies based in Las Vegas, with the rest from out-of-state and global corporations,” Thompson wrote in a recent report.

Hill said Switch and other providers are building additional data storage facilities as a response to demand.

And that demand is only slated to grow, but how much will it grow in Nevada?

Over 200 billion smart devices will be connected to the internet by 2020, compared with only 15 billion in 2015, according to estimates by Intel cited in Tesla’s Securities and Exchange Commission filing.

According to research firm Gartner, smart cities will use 7.3 billion connected sensors by 2020, almost six times more than in 2015, representing a 42 percent compound annual growth rate.

More than 75 million autonomous vehicles will be sold by 2035, according to IHS Markit estimates.

Clustering

To take advantage of growth, Nevada needs a “data center cluster.”

John Lenio, senior vice present and economist at CBRE’s Economic Incentives Group, said Nevada is still in the early stages of developing such a cluster.

“Usually what we see economic development-wise is when there is a change in policy or a change in focus of the industries that are being attracted, it tends to take three to five years until you actually see impacts on the economy as a whole,” he said.

Business development drives data center construction, but data center construction also drives business development.

Companies see the benefits of having a technology infrastructure already in place to support their business, he said.

This type of relationship has already started to take shape in Reno, Hill said.

Google purchased 1,210 acres at the Tahoe Reno Industrial Center in April, for example. And, Hill said, Rackspace “is committed to coming” as well.

small pic description goes here

Competition

Some of the most important factors that data center operators consider when choosing where to build are taxes, tax incentives, power costs and facility construction costs, according to research from CBRE.

According to CBRE, Nevada is in the middle of the road when it comes to the costs to build and operate a data center, qualified as costing between $252.9 million and $275.8 million.

Las Vegas competes for data centers with Phoenix, Denver and Salt Lake City, according to 451 Research.

Since 2005, other states have used data center-specific tax incentives to give them an edge. Lenio estimates that about 20 states are now using them, but Nevada “is a little bit behind the curve.”

Nevada began offering data center-specific tax incentives only in 2015.

Three companies have been approved for such incentives since.

Hill said the data center-specific tax incentives focus on tax revenues instead of job creation, since data centers are not big permanent job creators.

Easy money

The typical data center will hire between 25 and 50 employees, Lenio said. But a CBRE study found that “a $1 billion data center could generate upward of $200 million in total tax revenues over 10 years.”

Hill said data centers in Nevada typically generate in excess of $30,000 a year per employee.

“And that is quite a bit higher than the cost of providing services to employees and their families, so it is a great fiscal deal for the state,” Hill said.

Capital investment by the companies approved for data center abatements since 2015 — Switch, Rackspace and ViaWest — totals $3.2 billion, according to the economic development office.

Hill said local data center companies are adequately responding to the growing needs of their customers, and the local data center industry is certain to grow in tandem with development as needed.

According to documents that Switch filed Sept. 8 with the SEC, Switch’s campus in Northern Nevada “is designed to provide more gross square feet upon full build-out than any other data center campus announced globally.”

Contact Nicole Raz at nraz@reviewjournal.com or 702-380-4512. Follow @JournalistNikki on Twitter.

ad-high_impact_4
Local
Downtown Summerlin hosts its annual Festival of Arts
People crowd to Downtown Summerlin for the 23rd annual Summerlin Festival of Arts in Las Vegas, Sunday, Oct. 14, 2018. (Caroline Brehman/Las Vegas Review-Journal)
Clark County educators debate alternative grading systems
Spring Valley High School principal Tam Larnerd, Spring Valley High School IB coordinator Tony Gebbia and retired high school teacher Joyce O'Day discuss alternative grading systems. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Grandparents on the fire that killed three family members
Charles and Doris Smith talk about the night an apartment fire took the lives of three of their family members. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
New York artist Bobby Jacobs donated a sculpture to the Las Vegas Healing Garden
Bobby Jacobs, an artist from upstate New York, has spent much of the past year creating a sculpture of two separate angel wings. He donated the sculpture to the Las Vegas Healing Garden. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Weather will cool slightly through the end of the week
The weather will cool slightly through the end of the week., but highs are still expected to be slightly above normal for this year. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Mayor announces new public-private partnership
Mayor Carolyn Goodman announced the creation of the Mayor’s Fund for Las Vegas LIFE, a public-private partnership that will allocate money to the city’s neediest.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Fall fairytale gets cozy at Bellagio Conservatory
Bellagio Conservatory introduces its fall-themed garden titled "Falling Asleep." (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
What the house that Ted Binion died in looks like today
Casino heir Ted Binion died in this Las Vegas home in 1998. Current home owner Jane Popple spent over $600,000 to restore and modernize the home. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Rescue Mission employees terminated
Don James, a former employee for the Las Vegas Rescue Mission, talks about the day his team was terminated. (Erik Verduzco/Las Vegas Review-Journal)
Raiders Cupcakes at Freed's Bakery
Freed's Bakery will have Raiders-themed cupcakes available in store and for order during football season. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s fans say goodbye to Cashman Field
Las Vegas 51s fans said goodbye to Cashman Field in Las Vegas, Monday September, 3, 2018. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s owner Don Logan's last weekend at Cashman Field
Don Logan, owner of the Las Vegas 51s, gives a tour of Cashman Field before the team's final weekend using the field. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Metro Asst. Sheriff Brett Zimmerman on Aug. 8 officer-involved shooting
Metropolitan Police Department Assistant Sheriff Brett Zimmerman met with media Monday to discuss the details of the 14th officer-involved shooting of the year. (Madelyn Reese/ Las Vegas Review-Journal)
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program
Matt Kelly Elementary School hosted its third annual Back-to-School Red Carpet Program where community and business leaders joined to welcome students back with an inspirational welcome. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Star Trek fans on show’s enduring popularity
Star Trek fans at the Star Trek Convention 2018 talk about why they think the show has stayed popular across the years Thursday, August 2, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Business
Bellagio, MGM Resorts International’s luxury hotel turns 20
The more than 3,000-room Bellagio hotel is situated on the site of the former Dunes Hotel. The Dunes was imploded in 1993, and construction of the Bellagio started in 1996. It cost $1.6 billion to build, making it the most expensive hotel in the world at the time. The Bellagio was former Wynn Resorts Ltd. Chairman and CEO Steve Wynn’s second major casino on the Strip after The Mirage. MGM Resorts International acquired the property from Steve Wynn in 2000. (Tara Mack/Las Vegas Review-Journal)
Facial recognition software at G2E – Todd Prince
Shing Tao, CEO of Las Vegas-based Remark Holdings, talks about his facial recognition product. (Todd Prince/Las Vegas Review-Journal)
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant
Former NBA player, Shaquille O'Neal, speaks about his new Las Vegas chicken restaurant. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Bobby Baldwin to leave MGM
MGM Resorts International executive and professional poker player Bobby Baldwin is set to leave MGM.
Caesars has new armed emergency response teams
Caesars Entertainment Corp. has created armed emergency response teams. They are composed of former military and law enforcement officials. "These teams provide valuable additional security capabilities,” Caesars spokeswoman Jennifer Forkish said. Caesars is hiring Security Saturation Team supervisors, managers and officers, according to LinkedIn. The company did not say how many people it plans to hire for the units. (Las Vegas Review-Journal)
Las Vegas, airlines prepare for CES
CES in January is expected to attract more than 180,000 attendees. (Las Vegas Review-Journal)
AGS partners with Vegas Golden Knights
AGS is the nation’s second-largest manufacturer of Class II slot machines used primarily in tribal jurisdictions. It announced a marketing partnership with the Vegas Golden Knights NHL team. (Las Vegas Review-Journal)
Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like