The big East and West Coast cities may be losing their luster when it comes to building and operating data centers. The place to be is the heartland, where labor, land, and power costs are lower and the risks of terrorist attack or natural disaster are smaller.

The Best Cities For Data Centers Top 10 U.S. cities for information assurance Annual Operating Costs 1. Sioux Falls, S.D. $9.7 million 2. San Antonio, Texas $10.3 million 3. Ames, Iowa $10.4 million 4. Tulsa, Okla. $10.5 million 5. Des Moines, Iowa $10.5 million 6. Omaha, Neb. $10.5 million 7. Colorado Springs, Colo. $10.7 million 8. Albuquerque, N.M. $10.8 million 9. Denton, Texas $10.9 million 10. Champaign, Ill. $11.1 million Data: The Boyd Co. View total annual operating cost for 35 cities

It costs 45% more to build and operate a data center in New York than in Sioux Falls, S.D., according to a study of data center costs in 35 U.S. cities to be released this week. A 125,000-square-foot facility staffed by 75 would cost about $14.1 million a year in New York; in Sioux Falls, $9.7 million.

Businesses are being priced out of locations like Boston, San Diego, and New York," says John Boyd Jr., a consultant with site selection consulting firm The Boyd Co., which prepared the report for clients in the financial services industry. Comparative economics are the deciding factor in many site selection decisions, the report says. "The idea of attracting and retaining a workforce in a small city in the Midwest today is actually quite compelling."

The report names 10 cities as prime candidates for cost-effective and secure data centers, with Sioux Falls, S.D., coming out on top (see chart, right).

The ranking is based on factors such as land and power costs, telecom infrastructure, and a local workforce with data security skills, including people trained at universities recognized as National Centers of Academic Excellence in Information Assurance Education, which are certified by the National Security Agency. Other considerations include airline service from national carriers, insulation from natural disasters, and quality of life.

There are considerable cost differences between the Big Apple and the Gateway to the Plains. Annual salaries in New York for those 75 data center workers would be around $7.2 million; in Sioux Falls, $5.6 million. The cost of buying land and building a data center in New York would be $4.2 million annually, compared with $2.8 million in Sioux Falls. Power and cooling would cost $1.2 million a year in New York, but only a third of that in Sioux Falls.

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Taxes and travel-related expenses are part of the tab, too. Property and sales taxes come to $1.1 million a year in Buffalo, N.Y., compared with $680,000 in Cincinnati. Annual travel to and from a data center would cost about $196,000 in Winston-Salem, N.C.; in Detroit, add another $29,000.

When everything is tallied, which cities are most expensive to operate data centers? New York is at the top, followed by San Francisco; Oakland, Calif.; Boston; Detroit; Chicago; Philadelphia; Cherry Hill, N.J.; Minneapolis; and Buffalo.