38 and Growing: Data Centers Draw Big Dollars to Indiana

38 and Growing: Data Centers Draw Big Dollars to Indiana

One of the biggest niches in Indiana’s burgeoning tech sector is data centers.

Data Center Map finds that there are currently 38 data centers distributed throughout the state – and that number is expected to grow as the state courts tech sector businesses with tax incentives and other inducements.

So, what’s in it for Indiana? Plenty—including thousands of skilled trade jobs during construction and dozens of high-paying tech jobs after completion; local investment by the data center owner in infrastructure, STEM grants for schools, and more; and, best of all, millions of dollars added to the tax base when including property, computing equipment, and income from new jobs.

“Indiana is laser-focused on building an economy of the future that cultivates high-tech, high-growth sectors and in-demand jobs,” said Ann Lathrop, chief strategy officer at the Indiana Economic Development Corporation (IEDC). “To do this, we’re taking a comprehensive approach to economic development, ensuring our state and our communities have the quality of life, the talent, the modern incentives and the infrastructure needed to not only support this growth, but to attract it.

“Data centers are a central piece of that ecosystem, providing cloud computing and storage for customers in a variety of industries to power continued growth in technology and AI. In 2024 alone, AWS, Google, Meta and Microsoft have announced plans to establish new data centers in Indiana, committing to invest nearly $15 billion and expanding access to the critical infrastructure that is powering our economy today and tomorrow.”

What They Do, How They Work

Modern businesses can’t function without data centers, which store, process, and share their most important data and applications. Data centers process data and enable the applications and services we all expect in our business and personal lives.

Not all data centers are hyperscale — the sprawling warehouse-type structures that most often come to mind. Data centers can range from small server rooms to groups of geographically distributed buildings.

Data centers basically fall into these four categories:

Enterprise data centers—Owned and operated by a single organization to support its IT needs
Internet data centers—Used by telecom and internet service providers to house data for customers
Colocation (colo) data centers—Facilities that host or lease space and equipment to multiple users
Hyperscale data centers—Large-scale facilities that support high-volume data processing, storage, and computing services

Most data centers are two-story structures consisting of over 200,000 square feet of space. Because of their size, they’re often sited on large tracts of underutilized land.

Although construction of a data center shell generally lasts several months, an average hyperscale data center campus project could last more than five years, bringing in thousands of construction jobs. However, roughly 70% of facility construction happens inside the building, causing minimal disruption to neighbors.

Unlike other industries like manufacturing, warehousing, and retail, there’s no ongoing heavy truck traffic or congestion involved with data centers once they’re completed. Because they only employ 50 or so workers, data centers aren’t heavily populated and don’t add much to the existing burden for schools, police, and fire.

Data centers use a lot of power from the local power grid because it takes energy to run the servers and HVAC units needed to cool the facility. To ensure continuous power, data centers rely on backup generators and work closely with the local utility companies to shore up power infrastructure in the area.

Why Indiana?

Although Virginia, Atlanta, and Dallas lead as established markets for data centers, Indiana ranks eighth in emerging markets, according to the 2024 Global Data Center Market Comparison conducted by Cushman & Wakefield.

Indiana is popular with data center developers for several reasons. Its location as the “Crossroads of America” and proximity to Chicago (the country’s sixth-largest area for data centers, with 120) make it logistically ideal.

And then there’s the incentives, including a statewide data center sales tax exemption and an economic development rider offered by Indiana Michigan Power (I&M), which offers billing credit to eligible new and expanding businesses in the state.

What’s In It For Us

States love data centers because their capital investment is a big driver of tax revenue growth. A recent white paper by CBRE’s Data Center Solutions Group finds that capital investment of between $50 million to $1 billion on a typical data center breaks down to sales taxes on construction materials, use taxes on equipment purchases, sales taxes on power consumption and more on both the state and community level. Based on a typical state/community’s tax structure, a $1 billion data center could generate upward of $200 million in total tax revenues over a 10-year period.

And according to a recent data impact study by PwC, the United States data center industry’s total contribution to the national economy grew 37% from 2017 to 2021, generating between $355 billion to $486 billion in annual GDP contribution.

“Data centers benefit communities by driving economic growth through job creation and infrastructure investment,” said Nick Farris, director of acquisitions at Provident Realty Advisors, a Dallas-based developer with a niche in data centers. “They bring high-paying tech jobs, spur local businesses, and contribute to improved connectivity and technological advancement, which can attract further investment and innovation to the area.”

That’s why when Microsoft selected LaPorte as the site for a new $1 billion data center, locals were excited.

“The City of La Porte, like most cities in the Midwest, is eager to attract high-tech industrial development to the community,” said Bert Cook, Executive Director of the LaPorte Economic Advancement Partnership. “Developments like data centers are extremely capital intensive and result in significant increases in assessed values. While not the most labor-intensive developments, there are still solid job creations as well.”

Although Indiana’s recent at-scale data center announcements are still in the earlier stages of development, “we are anticipating, and already seeing positive economic impacts from these investments,” said Erin Sweitzer, deputy chief of staff/VP external communications for the IDEC. “These include hundreds of millions of dollars of economic impact through property and payroll taxes, hundreds of direct new full-time jobs, infrastructure and connectivity upgrade contributions, millions of dollars in annual workforce, education and community giving, and significant direct, indirect and induced supply chain and employee seeding.”

The growth of data centers also contributes to the continued innovation and growth of small businesses, startups, and major corporations alike, she added. “We have had an incredible string of investments committed in just the past few months, and we’re excited to see this industry continue to grow in the months and years to come.”

From Coal to Data

A great example of a data center’s positive impact on a community is the Digital Crossroad project, headquartered in Hammond, just south of Chicago. The colocation data center is built on the site of the State Line Generating Plant, a coal-fired power plant dating back to 1929, and in use until 2012.

The company broke ground on the 105,000-square-foot, 20 MW facility in 2018 and finished its first phase in 2020. Since then, leasing has been so successful that it’s currently at capacity and is set for expansion. The site can reportedly support up to 100MW via a dedicated substation.

Before it was decommissioned in 2012, State Line was the largest taxpayer of Hammond’s tax revenue. The addition of Digital Crossroads to the city’s tech sector was a big win for Hammond.
“The impact of data centers extends far beyond their primary function,” said Tom Dakich, CEO of Quantum Corridor, an attorney who was instrumental in jumping the legal hurdles involved getting Digital Crossroads into Hammond. “They are vital in attracting investments, boosting local economies, and enabling the digital transformation essential for modern businesses.”

Top 5 Data Centers in Indiana by Investment

  • Amazon Web Services, $11 billion data center in St. Joseph County
  • Google, $2 billion data center in Fort Wayne
  • Microsoft, $1 billion data center, La Porte
  • Meta, $800 million data center, Jeffersonville
  • Digital Crossroad, $75 million, Hammond
Click to share!