HSBC Spending $166M on Upstate NY Centers

In yet another example of how cheap hydro power is transforming the data center landscape, the huge international bank HSBC will spend $166 million to build a new 275,000 square foot data center in Niagara County in upstate New York. The company will also expand an existing facility in nearby Amherst. The two Western New York data centers will handle all bank transactions for HSBC in the United States and Canada. The project represents a total investment of $1.77 billion over the next 15 years, according to HSBC and state officials.

HSBC has not yet selected an exact site for its new center, but has made its decision based on a commitment from the New York Power Authority to allocate 11 megawatts from the Niagara Power Project as part of the financial incentive package. The power will be drawn from Expansion Power, one of two large blocks of low-cost Niagara hydropower reserved for Western New York businesses and industries.

"This major investment by HSBC, and the commitment to Buffalo Niagara it demonstrates, is proof positive that the availability of low cost hydropower can and should be a major benefit to doing business in Buffalo Niagara," said Andrew J. Rudnick, president & CEO of the Buffalo Niagara Partnership. "Companies have a choice to make about where to locate, expand or move, and in this case, 11 megawatts of Expansion Power will yield $1.77 billion in private sector investment in our community."

In recent months Microsoft, Yahoo and Sabey Corp. have all announced major data center projects in central Washington, where dam-driven hydro power will make for lower power bills. The focus on the cost of electricity is an outgrowth of ongoing challenges to power and cool high-density blade server installations inside data centers.

HSBC will spend $96 million for the 275,000 square foot building in Niagara County and the 25,000 square foot expansion of the existing data center in Amherst, and another $70 million in IT infrastructure for the two data centers. The bank said it will also spend $105 million annually in IT infrastructure annually over the next 15 years. It is considering four sites, according to local media reports.

HSBC, headquartered in London, is one of the largest banking and financial services organizations in the world. The company's international network comprises over 9,700 offices in 77 countries and territories throughout the world. HSBC has a 150 year history in Western New York and has long been one of the region's largest employers.

With its commitment to New York State, HSBC is eligible to apply to Empire State Development for a grant of up to $800,000 to be used towards construction, renovation, IT expenditures and machinery for the project. The company is also eligible for local tax incentives.

"This project reinforces the fact that we see this region, with its large, highly skilled, dedicated work force, as a great place for technology investment," said Martin Glynn, president and CEO of HSBC Bank USA, which is the U.S. banking unit of London-based HSBC Holdings Plc. "We believe it will serve as a catalyst for investment by other corporations as well."

Both land and electric power are cheaper in the Buffalo area than in the major financial centers like New York City, Boston and Long Island, or tech hubs like northern Virginia. The area less prone to major natural disasters than other parts of the country, although deep snow is a fact of life.

The proposed new data center will create 78 new jobs, on top of 5,830 HSBC has now in Western New York - including 850 in technology and services.