Data Center Move Plans to Connecticut – NBC Connecticut
It’s a known fact that the COVID-19 pandemic has changed the way we work.
Big companies that at one time would never consider employees working from home and now most of them have no choice but to make it part of their new normal.
This includes major insurance companies, places like Twitter, even news agencies. But what has it done for our state’s ability to try to recruit new business here?
NBC Connecticut’s Mike Hydeck spoke with Commissioner David Lehman of the state Department of Economic and Community Development about it.
mike hydeck: “So one of the big pushes in the last year, maybe a bit more than that, has been building and moving massive data centers here or locating them here in the beginning. It kind of seems like sort of be on the back burner. We haven’t heard much about it lately. What about?”
David Lehman“Yeah, so the legislation was passed a year ago. And we’re in active conversation with a handful of people who are planning data centers or are in the early stages of finding tenants. So we’re still optimistic that we’re going to see data centers here. We’ve spoken with between 15 and 20 potential users and developers, so it’s really a function to do the first or the first two. And I think you’ll find out more later this summer, later this year, but we are still optimistic that this is part of a successful development strategy for the state.
mike hydeck“Would that be millions in tax revenue you would say over time? What kind of investment in the state could a place like that get and would they get tax breaks?”
David Lehman: “So a typical data center, depending on its size, can be anywhere from $150 million or $200 million in construction expenditures to well over half a billion dollars. So tax revenues, certainly in cities, are important, in the millions of dollars of incremental big list revenue. And as I mentioned, these are very difficult long-term capital investments. So with data centers, what we’ve seen in many other states, like Virginia, for example, it’s a significant amount of construction jobs, given the size of the centers and the initial expenses, and then significant revenues for the cities over time, in addition to ‘better data infrastructure, which we think is so important, especially in a remote work environment for states like Connecticut.’
mike hydeck“Another major concerning project is this state’s goal of making our coastline the hub of the eastern United States for building wind turbines, to try and get clean energy here in New -England. The cost has skyrocketed. Now Eversource is sounding the alarm that they could pull out of the deal Orsted. Is the state trying to protect this major investment? And if yes, how ?”
David Lehman“Absolutely. I mean, offshore wind and the transition to renewables, wind being one of them, solar being the big other, that’s going to happen not just in the five next few years, but over the next generation or two So the investment in New London from the state pier, and for those who haven’t seen it, I encourage them to do that is quite important. And that’s going to be the hub, one of the deep water hubs for the offshore wind industry. So the state continues to work with partners, you also mentioned Eversource, Orsted. And that’s going to to be a big industry when you think about 20 to 30 years in the state, as well as in Massachusetts until Virginia, the states are making investments and Connecticut is going to be a big part of that industry. one of our priorities. In addition, I would say that it is important that the State diversifies where it draws its n energy. So solar, wind, obviously the prices have fluctuated ting significantly. And lately they have increased. But we want to make sure we have renewable energy. So it’s also going to provide more price certainty, in addition to being cleaner going forward.”
mike hydeck“If Eversource pulls out, does that mean more of the tab will go back to the taxpayer?”
David Lehman: “Nope.”
mike hydeck“So are we looking for another company to take their place? If they pull out?”
David Lehman“Yeah. Ultimately, I expect that if they do that, they’ll be looking to sell their interest, and you’ll see a new partner at the table. So no, it’s going to be a private market trade We don’t think it’s going to impact the state, or how the state views it economically.”
mike hydeck“So we have more and more large companies, as I said at the start of the segment, with employees working from home, which means there is much less need for a large office footprint. Does that have any impact on trying to recruit companies here and rents that might take place in places like Stamford, and so many people leaving New York for Connecticut, but that doesn’t necessarily mean that they rent buildings, right?”
David Lehman: “Yeah, it depends. So we’ve seen over 40, maybe 45 now, business expansions, some of which were in-state businesses, some relocations, from places like New York, as you mentioned , and in places like the Stamford or the Stamford area, you’ve seen significant activity as well as rent increases depending on the building, so there’s still a difference between the suburban office park, where there’s less activity and less demand, compared to a central business district and close to the train or very close to cities, so we expect, as we are currently going through the pandemic phase of COVID, that businesses will take more decisions in terms of footprint and what’s needed. It’s been pretty quiet, and I think you’re going to continue to see in places like Stamford and Hartford, some of the structural vacancy in the buildings. There’s had just too much space, even before the pandemic, probably in some of these areas. We hope you are going to see the conversation continue ons to residential. That plus offices and businesses are going to do, they’re going to be making decisions about hybrid and remote and what do they need? Do they still need 50,000 square feet, or is it now 30, and you’re going to see the transition. However, this will take time. It will take 10 to 20 years. But I expect that in 10 years you will see more residences in our downtown areas. And you’re going to see a different type, a more flexible type of commercial space.”