After the Kansas City Chiefs won a second straight Super Bowl this year, team owner the Hunt family this month scored another big win: It landed Google’s commitment to build a $1 billion data center.
The facility, slated for the Hunt Midwest Business Center in Kansas City, will be Google’s first data center in Missouri. It's a decision that highlights the Midwest’s increasing appeal for cloud computing service providers preparing for artificial intelligence-fueled growth.
In a global data center report, real estate brokerage Cushman & Wakefield listed Kansas City this week as the No. 1 emerging market. It was followed by Milan, Italy; Nashville, Tennessee; Osaka, Japan and the state of Iowa.
While acknowledging Northern Virginia as the world's top established data center market, the report noted Kansas City’s significant available acreage and potential energy sources as reasons for its rise.
The Hunt Midwest Business Center development is almost double the potential $575 million investment that Google confirmed last month it's behind in Cedar Rapids, Iowa. The tech giant’s largest data center is already in Council Bluffs, Iowa, where it has invested nearly $5 billion since 2007. The company also has a data center in Papillion, Nebraska, and a $600 million Lincoln, Nebraska, project poised to go up on roughly 580 acres.
Google has company investing in Midwest digital hubs. Meta, the parent company of Facebook and Instagram, is building an $800 million, 1 million-square-foot data center in the Golden Plains Technology Park in Kansas City. Meta also has a two-building campus in Altoona, Iowa.
Data center developers have targeted Midwest office campus conversions, too. In suburban Chicago, Compass Datacenters is turning Sears’ longtime headquarters, one of the largest office complexes in the region, into a 200-megawatt data center campus. One megawatt is roughly enough to power about 200 houses for a day.
“Google’s decision to locate their new data center campus at Hunt Midwest Business Center is the culmination of the long-term vision and sustained teamwork of so many strategic partners at every level,” Ora Reynolds, president and CEO of developer Hunt Midwest, said in a statement. Hunt Midwest is one of an array of businesses owned by the Hunt family, a collection that spans the Chiefs football franchise, FC Dallas professional soccer team, the energy sector and private equity.
Eye on Midwest
Google has picked the Midwest locations for their combination of energy infrastructure, developable land and available workforce, the company has said publicly.
The region has become a more attractive alternative data center market as the U.S. East and West have matured and run out of land and power, according to Mike Bell, senior vice president of commercial real estate for Hunt Midwest, in an interview with CoStar News.
Power consumption is important for data centers, and some critics have expressed concerns about unbridled demand. For example, Georgia is looking to suspend a tax break for data center construction, a move that opponents say will bring the robust development of new data centers in the state to a halt.
The Kansas City project represents the culmination of Hunt Midwest and Google working together for six years, Bell said.
Hunt Midwest Business Center is a 2,500-acre business park home to more than 68 companies within a wide variety of industries.
“I think there were multiple factors for Google’s decision,” Bell said. “One is that those other areas of the country are filling in. And two, more important for them and for others, is being in the geographic center of the United States.”
Bell acknowledged the acceleration of AI in computing and said Google can create a “multiplier effect” when entering a market because other companies want to be close by.
Hunt Midwest Business Center offers development options both above and below ground. The SubTropolis Technology Center is a former underground mining operation Hunt Midwest has turned into a purpose-built data center campus.
Bell said there’s 2 million square feet below Google’s planned data center the company could “grow into” once the development above ground is finished.
Google’s data center represents a significant investment in its innovations and cloud computing business. The data centers help power popular digital services such as Google Docs, Maps, Search, Gmail, and more.
The company is partnering with Ranger Power and D. E. Shaw Renewable Investments to provide 400 megawatts of carbon-free energy to support the data center’s operations. That is enough electrical capacity to fuel 750 homes at once.
“We have reached an important inflection point for tech innovation like AI, and data centers are the backbone of this progress,” Monique Picou, global vice president of cloud supply chain and operations at Google, said in a statement.
Google has stepped up its investments in data centers to prepare for AI and to reduce expenses by improving efficiency in its technical infrastructure. The largest component of its fourth-quarter capital expenditures of $11 billion was for servers, followed by data centers.
The fourth quarter “reflects our outlook for the extraordinary applications of AI to deliver for users, advertisers, developers, cloud enterprise customers and governments globally and the long-term growth opportunities that offers,” Google’s parent company, Alphabet, reported in its year-end 2023 earnings call. “In 2024, we expect investment in [capital expenditures] will be notably larger than in 2023.”
Consumers and businesses are expected to generate twice as much data in the next five years as was created over the past 10 years, according to real estate firm JLL in a recent North American data center report. Such growth will create a need for more data centers as well as more energy-efficient designs and locations.
The need for more power will require operators to work with local governments to find sustainable energy sources, according to JLL.
Google’s Kansas City project is expected to draw power from the Missouri-based Beavertail Solar farm. The agreement supports Google’s 2030 goal to run all its data centers and campuses on carbon-free energy.