CBRE: Data Center Incentives Strengthen Texas’ Competitive Advantage

  Data center tax incentives that took effect Sept. 1 will only strengthen the state’s allure as a corporate expansion and relocation market, according to a research report released today by CBRE’s global research and consulting group. Texas H.B. 1223’s tax structure will add to the state’s low cost of power, robust fiber infrastructure, large and well-educated work force, low cost of living, and affordable real estate, the report says.

The program provides 100 percent exemption of sales taxes on business personal property essential to data center operations, including things like computers, electrical equipment, cooling systems, power infrastructure, and software.

According to John Lenio, economist and managing director of CBRE’s economic incentives group, about 17 states have passed similar measures to attract data centers. Although they typically don’t create a lot of jobs, data centers still have a significant impact on a state and community, he said. For example, in Texas, a data center with a $500 million capital investment creates the same impact as a 500-job corporate headquarters.

David Liggitt, vice president of CBRE’s data center solutions group, said users look at the cost of power, natural hazard risk, and access to fiber when evaluating space. “In addition, understanding a market’s tax abatement and incentive opportunity continues to rise in importance as states compete aggressively for data center projects,” he said.

To view the full report, written by Sara Rutledge, director of research and analysis for CBRE, click here.