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GRDadof3

Steelcase Pyramid to become $5Billion Switch Data Center

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22 hours ago, mielsonwheels said:

They also mentioned 46% of available space being full. That's a pretty big chunk of space in itself and it'll be interesting to see if companies expand their presence once they've proven quality of service.

Joe

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A year ago they promised one of their larger Tier 5 colocations would be built by summer of 2017.   They still haven't broken ground on that.   The fact that they are only 54% full in the pyramid may be is a sign of slowing sales or maybe a lack of commitment to Grand Rapids (I noticed that they are building another location in Atlanta).  

Edited by Sparty97

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They literally just announced a 940,000 sq ft expansion. Doesn’t sound like a lack of commitment to Grand Rapids. They also IPO’ed this year, which may have threw off timelines a bit. 

Joe

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17 hours ago, Sparty97 said:

A year ago they promised one of their larger Tier 5 colocations would be built by summer of 2017.   They still haven't broken ground on that.   The fact that they are only 54% full in the pyramid may be is a sign of slowing sales or maybe a lack of commitment to Grand Rapids (I noticed that they are building another location in Atlanta).  

I agree with Joe, I don't think there's any sign of trouble.  They just "bought" the Pyramid, IPO'd successfully, and announced that they're kicking off expansion. I guess if you're looking for chinks in the armor you can probably find some. 

If people are worried about the tax credits, they don't actually get them until they actually buy equipment. No equipment, no tax credits to give on anything. 

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I'm rooting for them to come through in their datacenter buildout.  I think the impact to Grand Rapids can be significant.  I'm just pointing out the stark difference between what we were told in the sales cycle and what has actually happened. When we visited in the fall of 2016, they told us that they would be full in the pyramid by December 2016 (State of Michigan was already in there) and would have availability in their new SuperNap by summer of 2017...  They also said that Grand Rapids was the site for the entire East Coast, but now I see Atlanta.  We saw a lot of red flags (they had some obvious engineering challenges with building out all the datacenters in the Pyramid)  and went in a different direction.  

Edited by Sparty97

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So I assume that "Sector 2" is still inside the Pyramid? Wonder if this means work on the first exterior building begins soon?

http://www.mlive.com/news/grand-rapids/index.ssf/2018/05/consumers_energy_critical_data.html

GAINES TOWNSHIP, MI -- The data center complex near Grand Rapids operated by tech giant Switch Inc. has a new customer in Jackson-based utility Consumers Energy.

A deal between the two companies was announced this week in a news release from Switch. The company says the new Consumers data has resulted in 90 percent occupancy of the second sector built within the Gaines Township Pyramid Campus, so named because of the building's unique design.

 

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Drove by the Switch building yesterday and was thinking about how little you hear about it. Remember when it was supposed to increase flights to the airport, 1000 jobs, spinoff development, etc. So far they've employed 74. :) 

I was a cheerleader on this one, but maybe a bit of boondoggle? Interesting article from Mlive:

https://www.mlive.com/news/grand-rapids/2019/11/lawmakers-gave-big-tax-breaks-to-switch-data-center-are-they-working.html

Joe

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Data centers don't employ very many people, and this project filled a vacant building.  So I would say it's a success.  Maybe expectations were too high?

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1 hour ago, The ATX said:

Data centers don't employ very many people, and this project filled a vacant building.  So I would say it's a success.  Maybe expectations were too high?

Expectations were high only because it was given all sorts of tax breaks because they said it was going to generate a lot of jobs and economic development. 

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I took a tour of the place a while back. The owner bought it becasue he thought it was neat. It isn't "full" yet. But their full build out is 3 more centers on the property. The pyramid will be one of 4 buildings on site.

Edited by Raildude's dad

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21 hours ago, GRDadof3 said:

The tax breaks are on equipment that they buy, so if they don't expand into the 4 planned buildings, they don't get the additional tax breaks. In other words, they legitimately got tax breaks (didn't have to pay sales tax) on the equipment they've purchased so far. Most businesses do not pay sales tax on equipment they buy wholesale. 

They weren't given tax credits (like the film industry was being given here). 

I was a bit taken aback that they didn't realize the tax breaks they were given didn't exempt school bonds, and now they want those exemptions. If you don't support the local school bonds as a business, git. 

Agreed. If paying taxes to schools is what stops someone from moving to this area, then they're not the kind of business this area needs or wants. Also, the Superintendent in the article is correct in that they haven't been a great member of the community. I have not seen how Switch has come anywhere close to delivering on its promises. 74 people employed since March 2017 when it opened? That's an average of 29.6/year, which puts them at 296 jobs in 10 years at the current rate. 1,000 jobs in the pyramid? Also, have we started to see these supposed clients move in around them the last 2.5 years to create an additional 5,000 jobs? I was excited about the possibility of this place, but they lost me with their using the state to get out of paying their local public school taxes. 

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3 hours ago, GRLaker said:

Agreed. If paying taxes to schools is what stops someone from moving to this area, then they're not the kind of business this area needs or wants. Also, the Superintendent in the article is correct in that they haven't been a great member of the community. I have not seen how Switch has come anywhere close to delivering on its promises. 74 people employed since March 2017 when it opened? That's an average of 29.6/year, which puts them at 296 jobs in 10 years at the current rate. 1,000 jobs in the pyramid? Also, have we started to see these supposed clients move in around them the last 2.5 years to create an additional 5,000 jobs? I was excited about the possibility of this place, but they lost me with their using the state to get out of paying their local public school taxes. 

I think a problem they might be having is a perception issue. They are selling this as an "East Coast node" of their cloud network, because they're all from the West Coast and they probably think of us as the East Coast. But no one on the East Coast would ever in a million years call Michigan part of the East Coast. And that's who they're selling to: East Coast companies (I believe). 

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14 hours ago, GRDadof3 said:

I think a problem they might be having is a perception issue. They are selling this as an "East Coast node" of their cloud network, because they're all from the West Coast and they probably think of us as the East Coast. But no one on the East Coast would ever in a million years call Michigan part of the East Coast. And that's who they're selling to: East Coast companies (I believe). 

When they first sold this to the community, this was THE East coast facility.  Then shortly afterwards, they agreed to build a SuperNap data center near Atlanta (The Keep).    That is around the time the investment into Grand Rapids went dry. Now GR is listed as their NE campus and Atlanta their SE campus.   I'm hoping that they will return to their initial plans to build out the other buildings on the Pyramid campus. 

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So other than initial temporary construction jobs, I just never understood how it would create that many jobs..,.with the idea of multiple hotels to support it?

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27 minutes ago, GR8scott said:

So other than initial temporary construction jobs, I just never understood how it would create that many jobs..,.with the idea of multiple hotels to support it?

Who knows.  Traffic out of GRR has been up double digits every month for the last few years.  There's been a lot of improvements, and Allegiant has been a big catalyst for recapturing local leisure travelers. I still think maybe there's a possibility that Switch does generate some of that traffic. It's somewhat of a ghost company to begin with, like a sub tier automotive supplier.  It doesn't interface with the public at large so it doesn't doesn't come with public visibility.  It's hard to know exactly what goes on there. 

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1 hour ago, MJLO said:

Who knows.  Traffic out of GRR has been up double digits every month for the last few years.  There's been a lot of improvements, and Allegiant has been a big catalyst for recapturing local leisure travelers. I still think maybe there's a possibility that Switch does generate some of that traffic. It's somewhat of a ghost company to begin with, like a sub tier automotive supplier.  It doesn't interface with the public at large so it doesn't doesn't come with public visibility.  It's hard to know exactly what goes on there. 

Could be but since the pyramid parking lot is mostly empty that would mean almost all these out-of-town visitors are being Ubered or otherwise shuttled between the airport and the pyramid and their hotels.  I don't think that is likely.  I know when I traveled on business, I might not have a car if my business took place in a downtown, but out in the burbs or the country I'd always have a rental. 

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2 hours ago, MJLO said:

Who knows.  Traffic out of GRR has been up double digits every month for the last few years.  There's been a lot of improvements, and Allegiant has been a big catalyst for recapturing local leisure travelers. I still think maybe there's a possibility that Switch does generate some of that traffic. It's somewhat of a ghost company to begin with, like a sub tier automotive supplier.  It doesn't interface with the public at large so it doesn't doesn't come with public visibility.  It's hard to know exactly what goes on there

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I find it highly unlikely that hundreds of people are flying in to work on servers. Install, maintenance, (an maybe configuration ) may have to happen onsite, but I’m sure 99% of all work is done remotely. Just look at Amazon AWS. Huge companies depend on these services/servers, and I bet most I’ve never seen an actual AWS server. 
 

from what they proposed in the beginning, GR is a great place for a data center. Cool climate, very low risk of natural disasters, and acceptable thresholds for speed to most of the east coast/Midwest. I bet it’s a good location. But I also doubt they’ll truly hit 1000 jobs gained without fudging numbers a bit. (Temp construction jobs, 3rd parties, etc). 
 

Joe
 

 

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