Atlanta rapidly grows data center footprint amid fervent competition

Companies target Georgia because of available land, cheap power rates, existing infrastructure and lucrative incentive offers

Correction: An earlier version of this article said Georgia’s tax incentive policy for data centers would sunset in 2028. A bill passed earlier this year to extend the policy through 2031.

About a mile west of Georgia Tech’s campus, a pair of buildings that combined are nearly the size of Buckhead’s Lenox Square mall bear the letters “QTS.”

While many Georgians might not know Kansas-based Quality Technology Services, the company is among the leaders in an industry nearly everyone uses every day — all you have to do is open a mobile app or an internet browser.

QTS builds, operates and leases space inside data centers, gigantic warehouses filled with rows and rows of computer equipment that power our digital lives, storing everything from bank records to government documents to video streaming files. Data centers have become one of the fastest-growing uses for industrial land in the United States as companies digitize and internet usage grows.

Georgia is among the states trying to become an industry leader by pumping money, resources and attention into attracting data centers. Facebook, Microsoft and dozens of other companies operate data storage farms and warehouses across the state, and metro Atlanta ranks as sixth in the nation with about 250 megawatts of production, according to commercial real estate services firm CBRE.

Sean Baillie, chief of staff and chief marketing officer for QTS, said demand has been insatiable. QTS has been investing in its complex near Georgia Tech for nearly 15 years, and two more buildings are already under construction, which the company plans to lease to other corporations.

“Usually when we do these builds, the buildings are about 80% sold out before we even turn them on,” he told The Atlanta Journal-Constitution. “So the buyers are showing up. They need to keep consuming this stuff.”

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Kristi Brigman, deputy commissioner of the Georgia Department of Economic Development, said the battle to attract data centers is one the state intends to win.

“It’s a great source of revenue for the state, especially for the community without a lot of infrastructure needs,” she said.

Critics say the facilities require a lot of power, water, land and resources to operate. They produce many temporary construction gigs but few permanent jobs, typically only a few dozen in-house employees. And state and local governments often pay millions of dollars in incentives to woo them.

J.C. Bradbury, a Kennesaw State University economist, said only a handful of companies will choose a location solely for incentives, and he said data centers are among the least beneficial industries to subsidize.

“There’s absolutely no reason to incentivize these things,” Bradbury said.

QTS, which lobbied for the state’s incentive policies, is one of the biggest players in Georgia, and its Fulton County expansion is only the beginning. As part of “Project Excalibur,” QTS recently paid $154 million to buy 615 acres in Fayetteville, which the company will transform into another massive data center campus.

“(Georgia) is a highly important and growing market,” Baillie said. “We’re going to keep investing here.”

Where ‘the cloud’ lives

QTS’s Atlanta campus is already one of the largest operational data centers in the United States.

Located off Jefferson Street within eyesight of the Fulton County Jail, the data center started as a southeast distribution center for Sears in the 1950s.

QTS currently operates two data centers on the Jefferson Street site, which span roughly 1.5 million square feet. The current expansion will add about 900,000 square feet of additional data center space by 2024. A later phase may add 350 apartments, 50 townhomes and 250,000 square feet of offices.

Georgia Power built two substations solely for the current QTS campus, and a third is in the works. In addition, data centers require a lot of water to offset all the heat generated by the rows of always-operating computer banks.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Fiber, the underground cable network that connects data centers to the outside world, is also crucial.

“Without fiber, data centers become just cold storage for computers,” said Jim Nolte, CEO of Bandwidth IG, a company that provides and maintains fiber for QTS in Atlanta.

Data centers effectively act as telephone switchboard operators, connecting network providers to the data their users are trying to access. This applies to internet cloud services and storage as well.

“The cloud lives in buildings like this,” Baillie said inside a meeting room at the QTS Atlanta facility.

The Fulton location and the forthcoming Fayetteville data center are multitenant campuses, meaning several companies and institutions lease space. Some data centers, like Facebook’s campus in Stanton Springs along I-20, are single-tenant complexes.

Credit: Submitted by Facebook

Credit: Submitted by Facebook

Baillie said the data center space was already growing at a rapid clip, but the COVID-19 pandemic further sped up demand as more organizations and companies invested in online services. During the first half of 2022, Atlanta ranked fifth in the country for data center leasing, according to CBRE. The vacancy rate is 3.6%, the fourth lowest in the U.S.

QTS was a public company until investment giant Blackstone bought it for $10 billion in June 2021, and Baillie said that’s allowed QTS to buy land and increase its data center footprint at an ever faster rate.

“(The pandemic) sped the market up, which sped us up,” he said.

Providing further incentives

Despite increasing demand for data storage, operators have commanded lucrative tax breaks and utility deals.

A 2018 Georgia law provides tax exemptions to large data centers that serve “hyperscale” companies, large data users. The incentive, which sunsets in 2031, has proven divisive among economists.

ExploreGeorgia judge’s incentives ruling threatens Rivian EV plant

Good Jobs First, a watchdog group, estimated that state and local governments nationwide pay $2 million for each job a data center creates.

The QTS campus in Atlanta currently employs about 50 people. Site Director Brian Huard said that will likely increase to 70 after the expansion. Nearly half are veterans.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Huard said data centers also support the jobs of hundreds of contractors and third-party companies in data storage and maintenance.

And those needs are only going to grow.

Tim Huffman, the executive vice president of data center solutions for CBRE, said data center jobs, while not abundant, are high-paying and competitive.

“A data center project is really an infrastructure project,” he said.