Illinois: current and future data center sites

Illinois has attracted significant attention from companies looking to build data centers. Data centers are the “computer rooms” that provide the data storage, data processing and data transmission resources needed by social media, streaming services, artificial intelligence and other digital companies. These centers require substantial capital investment, power and water to serve our ever-growing digital world. The emergence of artificial intelligence has turbo-charged the need for more and larger data centers.

There are roughly 200 data centers in Illinois. Data centers take a number of different forms, including:

• Enterprise data centers tend to be smaller designed for single users like hospitals or banks.
• Colocation data centers serve multiple businesses and take many different forms and are often designed to be shared by multiple tenants.
• Cloud data centers are shared by a great many users who often do not directly manage the physical data center location.
• Hyperscale data centers are massive centers often operated by large tech companies and require significant capital investment to build.

Artificial intelligence requires enormous computing power and is driving the need for more hyperscale data centers. Power, utility and labor needs typically push data centers toward urban areas. Data centers often choose urban areas for the following reasons:

• Data centers need reliable, high speed fiber optic networks. These networks are typically found in only urban areas.
• Significant power is required by data centers to operate properly. Often urban areas have more robust power grids capable of supplying the power needed by data centers.
•  Larger data centers require talented labor. A large center may require as many as 200 employees, some of whom will need to be highly skilled. Many rural areas will simply not have an adequate labor pool.

While most data centers in Illinois are found in urban areas, it is possible for some rural locations to work as well. Some rural areas can offer the advantage of lower land acquisition costs and real estate taxes. The persistent issue with rural areas tends to be inadequate power and labor.

In Illinois, it’s been the Chicago-metro area that has attracted the most attention from data center developers. There are already between 130-175 data centers (depending on the definition used) already in existence in Chicago and the Chicago suburbs. Elk Grove Village has multiple large hyperscale centers. Aurora also has a good number of data centers, including multiple CyrusOne centers. There are also a number of data centers in or near downtown Chicago. Digital Realty, QTS and other companies have large data centers in or around downtown Chicago.

There are also data centers located outside Chicagoland. Springfield has 6 data centers. There are also data centers in Rockford, Peoria and Champaign. There are a number of websites that are useful as a resource and highlight the location of data centers. These websites include datacentermap.com and cleanview.co.

In addition to the data center sites already in existence, at least 22 more are in some stage of planning in Illinois. Many of the zoning hearings tied to data center projects have been very contentious. Known proposed projects are taking place in numerous areas of Illinois, including DeKalb, Pekin and Minooka. Projects in Naperville, Yorkville. Lisle and Barrington Hills have been proposed but have run into fierce opposition and/or have been voted down or paused.

Data centers will be needed to facilitate growing demand for artificial intelligence. Count on where they go being a continued source of debate and local drama. Stakes are high in zoning hearings that involve data centers. These projects bring massive capital investment, technological advancement, economic development and jobs to the communities they come to. However, they also bring sweeping neighbor concerns about environmental impacts and utility costs. Despite the controversy surrounding data centers, these are essential to facilitating our increasing digital world. They are not going away. Count on data center proposals to lead headlines in the world of real estate in the years to come.

Client alert authored by Kevin M. Coyne (312 855 5441) Principal

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.