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What Makes the Chicago Data Center Market Great?

November 22, 2016

Written by David Horowitz

Why should you consider a Chicago data center location? Allow me to set the stage…

Growing up an avid Karl Malone fan from Minnesota, adapting to living in Chicago hasn’t been easy. It started my first year in Chicago when the White Sox won the World Series and has become more difficult as the Blackhawks have eliminated the Minnesota Wild from the NHL playoffs three of the last four seasons, and the Vikings have lost 10 out of their last 12 battles with the Bears. And people still can’t figure out why I’d rather drink a 3.2% beer in Salt Lake City than a fancy martini at Michael Jordan’s steakhouse (no offense to SLC, it’s just the Malone vs. Jordan rivalry still stings). My personal issues aside, Chicago has become one of the most attractive tourist and business destinations in the country with over 52 million people visiting Chicago each year. That said, I have come to appreciate all that Chicago has to offer, especially the Cubs’ World Series Championship – 108 long years in the making.

What does all of this have to do with data centers you ask? Nothing, really. I just wanted to keep the conversation interesting.

So here are eight reasons why the Chicago data center market (and in particular, Elk Grove Village) is considered one of the best in the U.S:

History – A fire that was initiated by a drought, high winds and wooden buildings in 1871 destroyed 1/3 of Chicago and left over 100,000 people homeless. In fact, the Chicago Public Library was created directly from the ashes of this incredible fire. Common wisdom is that fires and data centers don’t match. That’s true, but this Great Chicago Fire took place roughly 2.3 miles from the former R.R. Donnelley Printing Plant at 350 Cermak Road, a building that was built so robustly and with so much power and telegraph connectivity that it has now become one of the most important data centers in the country. This Chicago data center now has over 100 communications providers and remains fully occupied by data center colocation providers, financial institutions, technology firms and many more. The 350 Cermak data center consumes as much power as O’Hare International Airport but occupies just a small city block. The combination of exploding demand for data centers over the past ten years and the lack of available space and expensive and scarce land within Downtown Chicago has driven users to flock to Suburban Chicago, primarily Elk Grove Village, to accommodate their growing data center requirements.
Central Location – Besides Chicago being an ideal location to experience diverse cultural offerings, the city has two major airports, O’Hare and Midway, that allow for easy access from both coasts or around the world. Given the necessity and appeal for companies to locate their data center equipment outside of the expensive and congested central business district, Elk Grove Village (which is close to O’Hare International Airport) has quickly become one of the most important data center markets in the U.S. with over 1,000,000 SF of mission critical space from multiple providers. EGV is also home to the new T5@Chicago data center. The availability of power and robust connectivity in EGV continues to drive customers from within and outside of metro Chicago to this area for their data center needs. In a peer utility benchmarking initiative, ComEd’s system performs in the top 25% nationally for industry reliability statistics measuring both outages and durations. The tale of two markets (downtown and suburbia) for the Chicago data center industry aligns well with people’s attraction to the diversity of neighborhoods and culture in the Chicagoland area. In addition to direct access, the centrality of Chicago provides data center executives with low risk when it comes to natural disasters. Disruptions and downtime prove to be too costly for companies who rely on their IT to risk placing their sensitive equipment in areas that are susceptible to hurricanes, wildfires, earthquakes and tornadoes.
People – Chicago has that “Minnesota Nice” feeling to it. You have the hustle bustle feeling combined with Midwest generosity. This is part of the reason why top tech talent wants to be here in Silicon Prairie. According to Inc. Magazine, Chicago ranks as the fifth largest tech market in the country and landed second on the list of Top Cities for Fast-Growing Companies (trailing only NY). The diversity of industries in Chicago, coupled with the abundance of business incubators, allows people to collaborate and share ideas with others. The University of Illinois ranks as having the sixth best engineering program in the country according to US News & World Report, and almost half of its graduates (47%) stay in state. And don’t forget about two of the most premier collegiate business programs in the country in Northwestern and the University of Chicago. Chicago was also ranked the seventh best tech hub in the world in the 2015 Global Startup Ecosystem rankings. Definition of MN Nice – The cultural characteristics of Minnesota nice include a polite friendliness, an aversion to confrontation, a tendency toward understatement, a disinclination to make a fuss or stand out, emotional restraint, and self-deprecation.
Traffic (it’s not all bad) – Nobody likes traffic – especially displaced Minnesotans. However, relative to other major cities, Chicago’s traffic isn’t too bad. Chicago ranked number eight in the U.S. for its automobile traffic congestion, according to navigation company TomTom. Lengthy commutes aside, data centers like telecom traffic and Chicago’s location at the center of the national fiber optic system provides a hub for service providers and easy conversion carriers. Chicago continues to be a major internet hub with significant connectivity and bandwidth access across the metro area. The Downtown market is driven by connectivity and interconnection for low latency requirements and suburban areas like Elk Grove Village are driven by larger enterprise and cloud deployments. The Elk Grove Village market has robust fiber access and offerings for direct connections to the downtown carrier hotel, which allows for low latency requirements combined with lower total costs.
“It looks like an Ocean” – Lake Michigan is the sixth largest freshwater lake in the world and the only one of the Great Lakes entirely within the United States border (the others share with Canada, eh?). And yes, the surface area of 22,404 square miles does freeze over. Why is this important? Climate is a huge factor for data center site selection. Because of Chicago’s cool climate, customers can take advantage of free cooling to help lower total energy costs.
Power of the Skyline – The downtown Chicago office market boasts over 124 million SF of stunning architecture. This epicenter of commerce and nightlife is served by an underground utility network providing stable and reliable power at nationally competitive rates. Chicago’s power cost is over 25% lower than the national average. In addition, most of the power in Illinois comes from carbon free nuclear power sources (plus wind). No other state in the U.S. has more nuclear power plants than Illinois. Data centers obviously use a significant amount of power, and in conjunction with high-efficiency cooling designs, electricity rates have the greatest influence on data center operational Total Cost of Ownership. When companies are looking for data center space and going through market evaluations, Chicago typically ranks near the lowest in Total Cost of Ownership when compared to other primary markets due to its low cost of power and cooling.
Supply Creates Demand – People love Chicago for a variety of reasons – especially the food. Featuring 26 Michelin starred restaurants, there’s no shortage of dining options to satisfy any craving.Whether you’re looking for an experience with Top Chef’s winner Stephanie Izard, Italian guru Mario Batali, or just a traditional steak house, Chicago offers some of the best dining experiences around (don’t hesitate to call for recommendations). With each new restaurant success, another seems to open nearby and overall demand continues to increase. This, of course, reminds me of the data center industry. History has continued to prove that available supply creates demand in this sector. Customers flock to areas where data center inventory exists. At the moment, customers will have a difficult time finding inventory available for immediate occupancy. However, T5 along with a few other providers will be delivering commissioned data center space in the first half of 2017. While these deliveries will create an influx of supply, history has shown that the available space will be absorbed quickly.
Competitive Advantage – Got Power? Not all data centers are created equal. Data Center providers offer different solutions which attract select customers. However, as we all know, having access to power is critical for a data center.
T5@Chicago

T5@Chicago’s competitive advantage is the control of the remaining available power capacity in Elk Grove Village. The significant increase in data center demand has resulted in other metro-Chicago data center providers now facing power constraints. In fact, all other providers in Elk Grove Village who don’t currently have capacity in place won’t have access to additional power until the completion of ComEd’s new substation in 2018.

Sweet Home Chicago – Companies looking for efficient and cost effective data center solutions should look no further than Chicago. It’s a market with rich data center history that is risk averse to natural disasters or potential power grid failures because of its central location. ComEd’s ability to deliver power in a timely and cost effective manner, without jeopardizing reliability, is a major attribute that is not overlooked by companies who choose to either remain or establish a presence in Chicago. The quality of data center providers, connectivity and top-tech talent are differentiators when choosing between Chicago and other markets. For these reasons and more, T5 Data Centers was attracted to Chicago, and we hope you recognize the benefits of deploying your next data center in Chicago as well.

For you other history nerds, here are some additional fun facts about Chicago you may not have known:

Chicago is the only river in the world that flows backwards
Chicago’s downtown is called the “Loop,” referring to the area encircled by the elevated train tracks
Western Ave is the world’s longest continuous street at 23.5 miles
Four states are visible from the top of the Willis (formerly Sears) Tower – Illinois, Indiana, Wisconsin and Michigan
The four stars on the Chicago flag represent Fort Dearborn, the Chicago fire, the World’s Fair Columbian Exposition, and the Century of Progress Exposition
The first automobile race ever seen in the U.S. took place in Chicago in 1895
The first McDonald’s franchise restaurant opened roughly 8 miles from Elk Grove Village

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