Rackspace Buys Oregon Land for Data Center

Rackspace Hosting has confirmed that it has bought land in Oregon for a possible data center, but the company says it has not finalized any plans, and would work with a third-party developer rather than building the facility itself. Rackspace also announced that it is partnering with Digital Realty on a new data center in Sydney, Australia.

In a statement late Tuesday, Rackspace confirmed that it is the company behind Boardman Acquisition LLC, which has an option to buy 99 acres of land in the Port of Morrow in Boardman, Oregon. Rackspace says it has been scouting locations for additional data center space to house more servers for its fast-growing cloud computing operation.

"We have identified some obvious benefits to adding capacity in the west coast region and we find the benefits to be compelling," said Rachel Ferry, a Rackspace spokesperson. "We have even taken steps to help ensure that, if we ultimately determine that it is in our best interest to build a data center on the west coast that we can execute on that strategy. To date, these steps include purchasing land in the Port of Morrow and entering into an enterprise zone agreement for the operation of a data center. However, at this time we do not have any finalized build out or operational plans to share with you for this specific location or any other west coast location."

Rackspace is the most recent in a string of data center users targeting locations in Oregon. The state has no sales tax, as well as a climate that is ideal for free cooling – the use of fresh air cool servers, a strategy which can dramatically reduce the cost of operating a data center. The primary Oregon locations benefiting from the data center boom have been the Portland area – especially Hillsboro, a tech hub that grew up around a major Intel campus – and the small town of Prineville, where Facebook and Apple are building major data centers.

Will Work With Developer

Although it has bought land in Oregon, Rackspace says it has no plans to change its strategy of leasing data center space, rather than building new facilities. "We can re-affirm that  we do plan to remain consistent with our data center strategy of working with third party data center development and operational partners," said Ferry.

The leading candidates would be wholesale data center developers Digital Realty and DuPont Fabros Technology, who are already Rackspace's landlords in several major data centers. Digital Realty is working on a build-to-suit data center project for NetApp in Hillsboro, Oregon and is also building several facilities for Equinix. DuPont Fabros, a major player int he wholesale data center business, has not previously built a single-tenant data center for a customer, but has scouted sites in Oregon.

Last year, Rackspace CEO Lanham Napier said the company is looking at new space, and finding a cost-effective location is a priority.

“We are looking at places to where we are going to get a combination of the right climate, a good tax environment, (and) green power in the right infrastructure to deliver good performance for our customers,” said Napier. “We want to combine that with the right wholesale data center partner.”

In the wholesale data center model, a tenant leases a dedicated, fully-built data center space. This approach is quicker and cheaper than building an entire data center facility. The tenant pays a significant premium over typical leases for office space, but is spared the capital investment to construct the data center.

Expansion in Australia

Rackspace is teaming with Digital Realty to build its first Australian data center, located at Erskine Park in Western Sydney. The new facility will allow Rackspace to offer local dedicated hosting and cloud solutions to Australian customers who prefer to keep their data onshore. Since entering the Australian and New Zealand markets in 2009, Rackspace has experienced a significant increase in local customer numbers.

"Delivering Fanatical Support and our services portfolio to our Australian customers is our top priority," Jim Fagan, Managing Director of Rackspace, Asia Pacific. "As global expansion increasingly becomes part of many Australian businesses' immediate growth plans, when choosing Rackspace they know they can grow effortlessly with us thanks to our global presence."

"Australian customers love our support," said Mark Randall, Country Manager of Rackspace, Australia and New Zealand. "It really has set us apart in an industry otherwise dominated by telcos, with support models that leave a lot to be desired."

The Australian data center adds to its international data centre footprint, which includes existing facilities in Dallas, Chicago, Virginia, London, and Hong Kong. Since the company launched in 1998, Rackspace has grown its global base to over 190,000 customers and currently hosts more than 60 per cent of the Fortune 100 companies.

The Sydney data center is currently in the late stages of construction and the first customers are expected to go live in late 2012.