Though they span wide stretches of land, cost hundreds of millions to build and gobble up massive amounts of electricity, the data centers of the West Side can be rather inconspicuous.
With their giant walls painted modest white, they tend to sink back from the roads, surrounded by trees and high metal fences. Their owners, Microsoft among them, typically display signs calling attention to them. If you do catch a glimpse, you might think they’re warehouses or distribution facilities.
Yet these behemoths have become an important part of the West Side’s economy — and San Antonio’s tax base. In recent decades, 30 of them have popped up on the West Side, said Marty Wender, a developer who helped build many of them. And more are on the way.
Last week, the UT System Board of Regents sold a 123.4-acre plot at the Texas Research Park to CloudHQ, a data center company from Washington D.C., which owns more than 30 million square feet of data centers across the world. Site plans attached to Bexar County property records indicate the company is considering building either four or five data centers there.
On its website, CloudHQ says it operates 12 “campuses” across the globe. Its two U.S. campuses are in Chicago and northern Virginia. It seems San Antonio could become the third.
The property is on Lambda Drive, across from where Microsoft has since 2016 built 850,000 square feet worth of data centers valued at $304 million, according to the Bexar Appraisal District (BCAD). Only a quarter-mile east of the Medina County line, it formerly was the site of science labs for the University of Texas Health Science Center San Antonio, until the center moved the facilities to its campus in the South Texas Medical Center last year, spokesman Will Sansom said in an email.
He declined to share the sales price, citing “the ongoing sale of adjacent properties.” The UT System still owns nearly 58 acres of undeveloped land next to the site, according to BCAD. CloudHQ didn’t respond to an email seeking comment.
Wender said he knows of two more deals to buy land for data centers that haven’t closed yet.
“Probably within the next several years there will be 40” of the centers, he said. “And all of them on the West Side.”
A data center hub
If you use Microsoft’s OneDrive cloud storage service, or the Amazon Web Services cloud offered by Amazon, some of your data might reside on the West Side.
Amazon Web Services recently built a 109,600-square-foot data center on Potranco Road near Westover Marketplace, according to a list Wender keeps of Westside data centers and information from BCAD. Wender pioneered the area’s development starting in the early 1980s.
Yet it is Microsoft who wears the crown as the West Side’s data center king. By Wender’s count, the company operates four centers at Texas Research Park and three in Westover Hills, where it has another three under construction.
Filings made by Microsoft with the Texas Department of Licensing and Regulation (TDLR) show that it has spent at least $1.17 billion to build its Westside data centers since 2015.
In March, for example, it reported to the TDLR that it expected to spend $175.9 million to build what it calls SAT40, a 153,000-square foot-data center on Lambda Drive, across from where CloudHQ wants to build.
To put that price tag in perspective, the 32-story apartment tower the developer Weston Urban is building downtown is expected to cost $107 million — or about 60% of that. The cost of downtown’s Frost Tower was reported as being $142 million.
Data centers 101
Why are data centers so expensive? For one thing, they must be built to withstand extreme weather, Wender said. No matter what happens, they cannot lose power. That means backup generators. Also, with their servers creating so much heat, they’re built to have air conditioning constantly blasting.
“The building is like a bunker. It could get a direct hit from a tornado,” he said. “These companies have to have dual power. They cannot afford for power to go down.”
The West Side’s reliable electrical supply, with two transmission lines carrying power from different substations, deserves much of the credit for making it a data center hub, he said. The lack of natural disasters in San Antonio compared to other parts of the U.S. is another benefit.
Also, because the West Side isn’t atop the recharge zone for the Edwards Aquifer, the facilities can operate diesel generators, he said.
Stream Data Centers, a company that has built two data centers on the West Side, has cited San Antonio’s “reliable power and fiber infrastructure” as making it a good city for data storage.
The company’s first local data center, on Rogers Road, is “a perfect example” of its strategy of building where “risk is low, network connectivity is robust and sustainability is easily achievable,” it says on its website. The site “checked all those boxes — including relatively low-cost power, abundant renewable energy options and relatively low natural disaster risk.”
Wender has worked on deals for 19 data centers in Westover Hills, he said. Many were built by companies for use in-house, including by Frost Bank and Valero. Some are owned by companies such as CyrusOne, which rent space to tenants who need data storage but not enough to justify building their own facility.
As far back as the ‘80s, Wender began targeting data centers as a growth prospect, he said. The first was built around the end of that decade, he said.
The National Security Agency operates a large data center in its 69-acre facility at the crossing of Potranco Road and Military Drive West, next to the Amazon Web Services site, he said.
Data centers don’t have many workers relative to their size, yet Wender and others defend them as a source of tax revenue and of electricity payments to CPS Energy, the city-owned utility. Microsoft owes $6.4 million in taxes this year on the 94-acre plot for the data center it owns on Lambda Drive, according to BCAD.
Last year, City Council voted 8-3 to grant Microsoft a variance from San Antonio’s Tree Preservation Ordinance, allowing it to remove 2,642 trees from 33 acres of land on Wiseman Boulevard to build a data center.
All in all, the company owns 328 acres on the West Side, according to BCAD — some of which remains vacant.
