Switch Confirms Plans for Massive Michigan Data Center

Switch has confirmed plans to build a massive SUPERNAP data center complex in Grand Rapids, Michigan after the passage of tax incentives that were crucial to the deal.

The Las Vegas company, which operates a huge cloud campus in Las Vegas, plans to invest as much as $5 billion in a data center complex at the former Steelcase Pyramid complex. Switch plans to build up to 2 million square feet of data center space at the campus, which will serve as its East Coast cloud hub.

“We look forward to working in partnership with Michigan to attract the largest companies in the world to the Switch ecosystem here in the Great Lakes State,” Adam Kramer, executive vice president of strategy, said in a statement. The company said the passage of the tax package was essential to its choice of Grand Rapids for the project.

The Michigan project underscores several trends we’ve been highlighting here at Data Center Frontier, especially the emergence of massive cloud campuses that concentrate massive amounts of computing power in multiple data center facilities. Data center hubs enable companies to rapidly add server capacity and electric power, creating economies of scale as more workloads migrate into these massive server farms.

Debate Over Data Center Incentives

The announcement follows a legislative debate about the best way to promote the data center industry in Michigan. The Switch project hinged on tax incentives that would make Michigan competitive with other states extending tax breaks to large data center projects. The bills sailed through the state Senate last week, but prompted debate in the House, which removed provisions for abatements on personal property taxes.

The final package, which passed at 11:30 p.m. Tuesday, would end the tax exemptions if the data center industry does not collectively create at least 400 new jobs in Michigan by 2022 and 1,000 new jobs by 2026. The package now heads to the desk of Michigan Gov. Rick Snyder, who had sought the assurances on job growth for the project.

The bills exempt all data centers and colocation businesses from the sales and use tax on data center equipment for 20 years. The legislation applies specifically to companies generating 75 percent or more of their revenue from the data center business.

Economic Development as a “Team Sport”

“Today, Michigan not only welcomes Switch, it welcomes an entire industry to the state,” said Birgit Klohs, President and CEO, The Right Place, Inc., which promotes economic development in Grand Rapids. “I often remind our partners in the region that economic development is a team sport. This project epitomizes this. Without the assistance and support of countless elected officials, business and community leaders, Switch would not be coming to West Michigan.”