"Datacenter building decisions tend to fall into two camps with colocation providers plumping for urban areas while hyperscalers seek sites where electricity, land, and construction costs come cheaper. A study by the William Marsh Rice University in Texas, commonly referred to as Rice University, found that colocation facilities tend to be found in areas such as cities for proximity to their business customers, while hyperscale server farms follow a different tack."
"Giants like Amazon, Google, and Microsoft prefer to concentrate massive facilities in a relatively small number of lower-density regions, where energy, land, and construction costs are lower, making economies of scale easier to achieve, the researchers say. The study, by assistant professor of strategic management Tommy Pan Fang at Rice University and Shane Greenstein of Harvard Business School, offers a large-scale statistical analysis of datacenter location strategies across the US."
"Using county-level data, the researchers say they were able to model how population density, the mix of industries, and operating costs all help to predict where new datacenters are most likely to be sited. Third-party providers, meaning colocation and hosting companies, locate in urban areas because that's where customers (financial, etc) are based, and they place a high value on low latency, secure storage, and compliance with regulatory standards."
Colocation providers place datacenters in urban areas to remain close to business customers and minimize latency while meeting security and compliance needs. Hyperscale operators concentrate large server farms in a limited number of lower-density regions to lower electricity, land, and construction costs and achieve economies of scale. County-level factors such as population density, industry mix, and operating costs help predict datacenter siting. Datacenters also require reliable power, water, and sufficient network infrastructure. Regional hubs with strong network capacity and utilities become primary hotspots for hyperscale facilities.
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