Microsoft Cloud Bet?: $11M Land Deal for Giant Data Center

Microsoft (MSFT) has plunked down $11 million to buy 200 acres of industrial land in rural Port of Quincy, WA to build a second data center there. Is this another huge bet on Windows Azure, Office 365, Xbox Live and other cloud services? Perhaps.

The new facility will triple the size of Microsoft's current 470,000 square foot server plant. The vendor has some history in Quincy–first setting up a data center there in 2007 on 75 acres of agricultural land, attracted by cheap electrical power fed by hydroelectric generators drawing water from the nearby Columbia River–and three years later signaling its intention to expand its facilities in the area.

According to a report in the Seattle Times, the latest deal is said to be among the largest in Quincy’s history, with Microsoft paying $4 million for 60 acres of land already owned by the city and another $7 million for 142 acres of neighboring parcels Quincy will buy from private owners and sell back to the IT giant.

The transaction is expected to close in late January, 2014, followed by ground-breaking on the project in the spring with completion expected in early 2015. Microsoft said the data center will employ about 100 people.

Big Data Centers

The resulting facility is expected to be a colossus among giants. Quincy also hosts data centers belonging to IT heavyweights Dell, Intuit (INTU) and Yahoo (YHOO), and wholesalers Sabey and Vantage. Agriculture and food processing giants ConAgra Foods, National Frozen Foods, NORPAC, Columbia Colstor, Oneonta, Stemilt, CMI and Jones Produce also have data centers there.

In addition, direct sales giant Amway is slated to open a $38 million, 48,000 square foot botanical concentrate manufacturing facility in Quincy in May, 2014 to replace an existing plant near Los Angeles.

In moves to capture ballooning demand for connectivity in eastern Washington, network operator and data center services provider Level 3 (LVLT) has expanded its network's fiber backbone in the area, installing more than 200 miles of fiber cable and connections in Quincy alone. In addition, Level 3 also is connecting customers to regional incumbent local exchange carriers.

The Quincy data center project isn’t Microsoft’s sole server farm expansion. A Neowin report said the vendor also has offered a deal to The Netherlands to set up a $2.7 billion data center in the Noord-Holland province.

Data Center Pollution

Despite an influx of new jobs and expanded tax base, the growing number of data centers in Quincy hasn’t come without controversy. More than 140 diesel-powered backup generators are being built in the area, according to the Seattle Times report, prompting some local residents to question the safety of the resulting air polluting toxic fumes.

In April, 2012, the newspaper ran a report in which Washington’s Department of Ecology said Quincy’s air quality, even with the diesel generators, still exceeded some of the state’s cleanest communities, although some residents contended officials miscalculated the pollution risks. The New York Times published a follow-on story five months later.