Last year, a record $20 billion was invested in data centers nationwide to keep up with the growing number of YouTube videos, Instagram photos, Wikipedia entries, social media profiles, smart devices, ebooks, streamed movies and binge-watched shows that proliferate each and every day.
Though it's digital, that episode of "Stranger Things" or "The Crown" next on your Netflix queue has to be stored on a computer server somewhere. All those likes, retweets and harvested demographic data end up housed in cabinets full of computer hardware.
Multi-tenant data center space under construction in the United States doubled to 294.1 megawatts in 2017, up from 149.4 megawatts the previous year, according to the North American Data Centers Data Center Real Estate Review. However, leasing activity slowed in the Chicago area, one of the national hubs of data storage, because of a lack of available inventory.
Enter Indianapolis attorney Tom Dakich and New York City-based data center mogul Peter Feldman, who hope to start construction this year on an initial 105,000-square-foot Indiana NAP data center at the site of the former State Line Generating Plant on Lake Michigan, on the the border of Hammond and Chicago. They plan to invest at least $40 million in the project and eventually could invest up to $200 million to build 1 million square feet of computer storage space, which could be leased by a mix of telecommunications companies, tech giants, pharmacy chains, banks, insurance firms, and digital content providers like Hulu.
After initially looking at Chicago, they ended up choosing the lakefront site Hammond pitched for Amazon's second headquarters partly because of Indiana's lower cost of doing business, so they can tantalize customers with more affordable leasing rates.
Hammond city officials hope the project, which will include a tech incubator for start-ups and a greenhouse for Purdue University Northwest, could spark the development of a local tech sector and help diversify the Reigon's economy, which has long been diversified by heavy manufacturing of steel, gas and auto parts.
"This should create more businesses that will result in more tech jobs, clean jobs and clean companies," Hammond Mayor Thomas McDermott Jr. said. "Hammond was built around slaughterhouses, and it's long had industrial businesses that weren't necessarily the cleanest. But this is environmentally friendly and clean, new investment. I believe we're really turning the corner."
Potential to nurture NWI tech industry
The city has requested a tech incubator that will provide some of the estimated 100 jobs and lease space to startups likely to buy annual memberships. McDermott said they would benefit from a connection to dark fiber, super-fast internet speeds and the likelihood they would never lose power.
"Anytime you can turn the Rust Belt into something more tech, that's huge," McDermott said. "That location had been one of the biggest polluters in the Midwest, and now could help attract more tech businesses. You've got to start someplace."
The lakefront data center, which would store 1,000 kilawatts per 10,000 square feet, employ building security 24/7 year-round and be cooled by lake water, would serve as tech infrastructure that could underpin future investment.
"It's going to be primarily a hardware installation with some jobs supporting that hardware," Micah Pollak, Indiana University Northwest assistant professor of economics, said. "The data center is an important step toward developing a stronger technology industry in Northwest Indiana, but represents a small one with a long way to go. The data center primarily represents an investment in physical capital rather than human capital. While there will certainly be long-term jobs associated with the data center, these will likely be relatively limited considering the size of the investment."
But the startup incubator planned at the data center has potential to help nurture a tech industry in Northwest Indiana, where much of the tech talent commutes or moves to neighboring Chicago, Pollak said.
"While the data center is a physical capital investment, the technology incubator is decidedly a human capital one. The incubator improves our human capital by better preparing workers for the technology industry and knowledge-economy, as well as attracting skilled workers to the area," Pollak said. "Both of these represent necessary, but different types of, investments in our technology industry and are a positive sign for the future. Ultimately, their largest economic benefit will be in slowly altering the perception of our economy both within the Region as well as downstate, in Illinois and across the nation. These two investments demonstrate that Northwest Indiana is not only a desirable location, but is welcoming and supportive of new industries."
Increasing the green factor
Purdue University Northwest also hopes to use the proposed greenhouse as an incubator, such as for agricultural or horticultural businesses. Purdue University Northwest Chancellor Thomas Keon said it would primarily be used for academic research for biology professors, as a replacement for the greenhouse at the Gabis Arboretum in Porter County, and as a place where startups could test new products, such as to monitor the growth of new plantings.
"It would primarily be used for academic research and it certainly is a benefit to have it so close to the Hammond campus," he said. "We've had a desire for a greenhouse for some time and had been looking into placing one on the roof of a new building before the cost went up. This is a great opportunity because the city, university and private sector came together to make something that wouldn't have happened otherwise. I'm a huge proponent of developing such partnerships."
The business news you need
With a weekly newsletter looking back at local history.