To succeed in today's dynamic, digital economy, IT leaders are looking for the optimal placement of their mission-critical workloads across on-premises facilities, colocation data centers and cloud solutions. As part of finding the ideal hybrid IT mix, organizations are also considering the geographic location that best supports their modern infrastructure requirements and meets their customers' needs.
“Theoretically, a data center can be built anywhere with real estate, power and connectivity,” says Arpita Choudhury, Senior Research Analyst at ISG. “But, practically, the location of a data center directly impacts the quality of services it provides.”1
This article outlines five ways location can deliver a vital advantage to a data center.
In a digital world dominated by the cloud, it is easy to forget that actual physical proximity of a data center to the users is critically important. Since data is being transmitted from data centers to applications and back again, greater physical distance introduces multiple network hops that often result in latency. Just a few milliseconds of latency can be detrimental to many technology use cases including “inference zones” for artificial intelligence, real-time analytics, financial transactions, healthcare technology, e-commerce, apps and websites, and Voice and Video Conferencing (VoIP), to name just a few.
Datacenters.com advises, “The closer a data center is to its end users, the better the experience. This proximity reduces latency — the delay in data transfer — ensuring faster response times for applications, websites and services.”2
Low-latency is also the main driver behind the proliferation of edge data centers. These data centers are strategically located in smaller population centers, providing physical proximity for use cases such as the Internet-of-Things (IoT), smart cities, autonomous vehicles and Edge AI which processes data on local devices such as sensors, cameras and smartphones.
Raleigh, NC: American Tower's RA1 data center in Raleigh, North Carolina, serves as a great example of an edge data center, providing low-latency compute to a small yet vibrant and growing U.S. market.
The Enduring Significance of Edge Data Centers, a report from JLL, explains, “Edge data centers are increasingly vital as they bring computational power closer to data generation and consumption. This approach offers numerous benefits that address the growing need for improved latency, reduced data transfer costs, enhanced data security, and uninterrupted business operations.”3
Data center colocation is a cost-effective way for an enterprise to maintain edge data centers in multiple strategic markets.
The distribution of network infrastructure is such that certain geographic areas provide greater access to the internet, major cloud providers and other networks. This connectivity is often critical for data centers, especially for enterprises that require a global reach.
“A data center needs robust connectivity to serve its users effectively,” according to consulting firm Technology Management Corporation. “Therefore, proximity to major internet exchange points and telecommunication networks is essential. Urban areas or regions with well-developed internet infrastructure are preferred for this reason. Geo-diverse fiber routes to other key hubs out of the region, along with diverse carrier offerings, are critical to continuous uptime of the users accessing the data centers.”4
Climate is not the first factor one might think of when assessing data center location, but a climate with lower temperatures can significantly reduce cooling costs. One of the top data center expenses, "cooling can account for up to 40% of data center energy usage," according to the U.S. Department of Energy.5
Datacenterhawk explains, “In cooler markets, you can use the cool air outside to cool servers instead of air conditioning units. This can help keep power consumption costs down.”6
“The geographic location of a data center also determines its exposure to natural disasters such as earthquakes, floods, and hurricanes. Downtime caused by disasters can lead to significant losses in revenue and reputation,” according to Datacenters.com.2
However, data centers must also be purpose-built to withstand the particular types of extreme weather events that could impede operations in the regions where they are located.
Miami, FL: CoreSite's MI2 data center in Miami, Florida, features robust infrastructure built to withstand a Category 5 hurricane.
Certain regions in the U.S. attract data centers by offering tax incentives. For example, customers at CoreSite's Northern Virginia campus are eligible for a tax exemption program offered by the Virginia Economic Development Partnership (VEDP). Similarly, customers of CoreSite's Chicago campus can receive a tax exemption from the Illinois Department of Commerce and Economic Opportunity (ILDCEO).
Not every data center location can provide all the advantages outlined in this article. Each enterprise must decide on data center location based on its unique needs – and with 30 colocation data centers in 11 key markets across the U.S., CoreSite can help.
Ready to turn location into a competitive advantage? Connect with the CoreSite team to evaluate the markets, infrastructure and ecosystems that best align with your performance, scalability and cost objectives.
Whether you’re optimizing for latency, power efficiency or global connectivity, our experts can help you design a location strategy that supports your next phase of growth.
CoreSite owns and operates 30 data centers, totaling more than 4.8 million square feet, in 11 strategic markets across the U.S.
References
How to Find the Right Data Center Provider: Geography Matters , Arpita Choudhury, Senior Research Analyst, ISG. (source)
Does It Matter Where My Data Center Is Located?, Datacenters.com, January 13, 2025. (source)
Why Companies Choose Specific Locations For Building Data Centers, Technology Management Corporation, October 26, 2024. (source)