According to a new study, data center incentives are bringing $4.2 billion in new investments to Chicago, reported Data Center Frontier. The research by Mangum Economics, supported by the Chicagoland Chamber of Commerce and the Data Center Coalition, shows that the state’s 2019 tax incentive plan attracted 13 data center projects, creating over 8,000 jobs for construction workers. Additional projects will bring another $4.3 billion, which includes data centers Downtown and in the suburbs (near O’Hare Airport). The Greater Chicago area is now the second-largest data center market in the country.
“We’ve invested heavily in data centers because we know that they are a key part of the future of tech and construction across the country, and I’m thrilled to see that the data industry has recognized those investments and the value of opening data centers in Illinois,” said Governor J.B. Pritzker. “As our position in the data center economy continues to grow, we look forward to welcoming more business to our state and creating thousands of jobs to make our state even stronger.”
According to Data Center Frontier, companies receive exemptions from state and local sales taxes on data center equipment for 10 years if they invest a minimum of $250 million in the facility and create 20 high-paid full-time jobs. Chicago has long been an attractive location for data centers, geographically located in the central part of the USA. The Windy City is also a significant internet and financial infrastructure hub, with active communities of data center users and service providers.
“The data center industry in Illinois is growing rapidly with substantial investment from new entrants to the Chicagoland market and from companies growing their current footprint to provide more capacity,” said Josh Levi, president of the Data Center Coalition. “Illinois’ data center program has increased the state’s competitiveness and provides certainty to data center businesses as they make long-term decisions and plan large capital investments in new and expanded facilities.”
Although some critics question the efficacy of the tax incentives, Mangum noted that the 2019 Illinois tax package was a turning point in the region’s competitiveness. “Over the two-year period before the incentive was enacted, data center capacity in Chicago increased by a total of 1.4 percent; whereas in the two-year period since the incentive was enacted, Chicago data center capacity increased by a total of 19.4 percent,” the report said. Investments included $800 million by Meta and three Microsoft projects in Suburban Chicago totaling $913 million.
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