Data Centers in Connecticut: Six Reasons to Colocate in the Constitution State
In the digital era, where data is the lifeblood of businesses, the importance of robust, secure, and efficient IT infrastructure is increasing. Many companies, from startups to Fortune 500 companies, recognize the strategic value of colocation services. Amidst the bustling landscape of colocation options, Connecticut colocation services offer an attractive choice.
Nestled between the major metropolitan areas of New York and Boston, Connecticut presents a compelling blend of advantages that make it a prime location for colocation services. The state’s robust telecommunications infrastructure, competitive cost structure, proximity to major business hubs, and favorable business climate create a potent mix.
This article will delve into Connecticut’s unique benefits for businesses seeking colocation services. Whether you’re a local business looking to ramp up your IT resilience or an out-of-state company seeking a strategic colocation option, Connecticut’s colocation services landscape offers many advantages. Let’s explore them!
Connecticut Has a Thriving Data Center Industry
Connecticut’s colocation industry thrives due to a combination of strategic geographical location, robust infrastructure, cost efficiencies, and a favorable business climate. Seventeen colocation facilities serve local and international customers within and outside the state. Many of these facilities reside in major cities like Stamford, Hartford, and New Haven.
Some of the popular data center providers include:
- ChimeNet, Inc, Data Center (110 Barnes RD, 06492 Wallingford)
- Lumen New Heaven Data Center (54 Meadow Street, 06519 New Haven)
- CyrusOne Norwalk Data Center (Norwalk, 06854 Norwalk)
- SteelVault Data Center (66 Hawley Rd, 06478 Oxford)
- TierPoint Data Center (108 Bank Street, 5th Floor, 06702 Waterbury)
- Digital Realty Data Center (80 Merritt Boulevard, 06611 Trumbull)
The Constitution State is home to many wholesale and retail colocation facilities. These options allow businesses to find data centers that meet their needs and budget.
Connecticut is Centrally Located Near Major Markets
Connecticut is centrally located between the major markets of New York City and Boston. In addition, New Jersey, Pennsylvania, New Hampshire, and Rhode Island are within 100 miles of Connecticut. In fact, the combined GDP of the states within 100 miles of Connecticut totals over $3.4 trillion. This is greater than the GDP of the United Kingdom. By colocating in Connecticut, you can serve major markets with low latency.
Additionally, Connecticut’s distance from the New York City and Boston metropolitan areas can be advantageous for disaster recovery and business continuity. Having a colocation facility in Connecticut can help protect critical infrastructure from regional disasters that could affect nearby cities. Furthermore, Connecticut has many international airports and deepwater ports that connect it to thriving cities like Boston and Toronto. These attract multi-million dollar companies to the region, increasing the demand for data center services within the state.
Connecticut Offers Robust Network Connectivity
Connecticut boasts a robust and reliable telecommunications infrastructure ideally suited for businesses requiring colocation services. As a hub for several major telecommunications networks, the state offers access to high-capacity fiber-optic lines. This results in superior connectivity and low latency for data transmission.
The state has experienced a surge in fiber optic network investment. Frontier is building a fiber optic cable system at an expense of over $800 million. This will provide 90% of its customers in the state access to fiber internet by 2026.
GoNetspeed is also investing in the Connecticut market. They have now connected over 200,000 businesses and homes with fiber internet. They will expand this by another 100,000 through 2024, including investments in Clinton, Westbrook, and Seymour communities.
Other internet service providers expanding in Connecticut include Optimum, Charter, and Comcast. Consequently, data centers in Connecticut can partner with these network providers to access low-latency internet connections without network disruption.
Proximity to Major IXPs
While Connecticut has no major internet exchange points (IXPs), its proximity to other major metropolitan areas allows data centers in Connecticut low latency access to major exchanges.
Some of the notable IXPs in the neighboring states include:
- New York International Internet Exchange (NYIIX) – One of the largest IXPs on the East Coast, located in New York City. NYIIX offers its members a stable, neutral, and scalable peering infrastructure.
- Digital Realty Internet Exchange New York (formerly Telx) – Also located in New York City, this IXP provides peering services and interconnection options for various networks.
- Equinix New York (NY1, NY2, NY4, NY5, NY6, and NY9) – Equinix operates several New York metro area data centers, providing internet exchange and interconnection services to a variety of networks and businesses.
- Boston Internet Exchange (BOSIX) – Located in Boston, Massachusetts, BOSIX is a regional internet exchange offering peering and connectivity services to ISPs, content providers, and other networks.
- New England Internet Exchange (NEIX) – Also located in Boston, NEIX is a neutral, member-run exchange offering high-quality connectivity and peering services.
Data Centers Benefit From Favorable Economic Policies
Connecticut has a thriving economic environment that benefits from favorable economic policies. As of 2022, 15 Fortune 500 companies were headquartered in Connecticut. These include General Electric, Cigna, Stanley Black & Decker, and Frontier Communications.
Connecticut offers many tax breaks that data centers and their customers can use to maximize profit. Let’s explore a few.
Enterprise Zone Tax Breaks
The State’s Department of Economic and Community Development has marked designated zones across Connecticut that require economic growth. Data centers within these zones are entitled to numerous tax breaks.
For example, they can enjoy up to 10 years of corporate business tax credits, with the first three years at 100% credit and the last seven years at 70%. Data centers and their customers can access low-interest loans in these enterprise zones to help grow their businesses.
Sales and Property Tax Cuts
Colocation facilities in CT can receive many sales and property tax cuts when they match several economic criteria. Some of the requirements include the following:
- The data center provider must invest a minimum of $50 million if it is located in an enterprise or federal opportunity zone. If it is located anywhere else within the state, the center must provide at least $200 million in investments.
- The colocation facility must enter into a tax incentive agreement with the state’s economic department for an average of 20 years.
- To extend the tax break agreements for up to 30 years, the data center provider must invest a minimum of $200 million in the enterprise/opportunity zone or $400 million in any other region within the state.
- Host Fee Tax Breaks: To access additional tax cuts and financial support, data centers can enter into legal agreements with the municipalities they reside in before any capital project begins. More often than not, they must provide a certain number of new jobs and salary quotas annually.
All these tax breaks make it easier and cheaper for colocation facilities to establish in the state. As data centers tap into these incentives, they can channel more resources into improving the colocation services and lowering customer costs.
Data Centers in the State Have Access to Skilled Labor
Connecticut’s highly skilled and educated workforce is a significant advantage for customers of colocation services. The state is home to several reputable universities and colleges, including Yale University and the University of Connecticut. These institutions contribute to a steady stream of well-educated graduates, many specializing in computer science, information systems, electrical engineering, and other disciplines relevant to data center operation and management.
This pool of talent is a boon for colocation providers and their customers. With a skilled workforce, colocation facilities can ensure that they have competent personnel to manage and maintain their infrastructure. This leads to efficient operations, high uptime, and faster problem resolution.
Furthermore, for customers of colocation services, having access to a local talent pool can be advantageous if they require on-site technical support or have specialized IT needs. Rather than bringing in talent from other regions, they can tap into Connecticut’s local workforce.
The State Has a Reliable Power Supply
One of the key advantages of using colocation services in Connecticut is the potential for cost savings. The cost of commercial real estate, power, and other utilities is generally lower in Connecticut than in nearby major metropolitan areas like New York City and Boston. Lower energy and real estate costs can reduce the overall cost of colocation services.
Connecticut has numerous electricity-related construction projects underway to help support businesses and their customers. One prominent example is the Killingly Energy Center which is currently under construction. Built by NTE, this power center is expected to generate 650 megawatts of multi-tenant commissioned power within a decade.
Renewable Energy Supply
Connecticut is increasingly interested in growing its capacity to generate renewable energy via solar and wind farms along the coastline. In addition to ongoing construction efforts, the state is collaborating with New York, New Jersey, and Massachusetts on a $70 billion offshore wind farm initiative. This wind farm is expected to add up to 25 megawatts of electricity to the region over 15 years.
Furthermore, the Connecticut Renewable Portfolio Standard policy requires that electric utility companies within the state offset a specific percentage of the energy they sell with renewable energy credits. Further investments in renewable energy should lower the price of colocation in years to come.
How Brightlio Can Help With Colocation Pricing in Connecticut
Brightlio can help with competitive colocation pricing in Connecticut and other data center markets. We partner with a global network of data center providers, connecting your business with partners that match your requirements and budget.
As a telecommunication broker, our additional services include network connectivity, unified communications, public cloud solutions, and advisory services. We are committed to being your most trusted and responsive IT solutions provider.
Contact the team today to get started!
If you liked this article, you might enjoy our analysis of the top reasons to colocate in New York’s data center market.
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