Missouri Mania

Which state is this year's hot data center magnet? If you guessed one of the existing major Internet markets, like New York or Northern Virginia, you'd be wrong. It's Missouri, where Kansas City and St. Louis markets are seeing an influx of corporate users seeking backup facilities. The latest prospect is Endur Corp., which plans to spend $60 million to build a new data center in the Kansas City area.

Denver-based Endur was founded in February 2001 and has financial backing from from Calpine Corp., a power provider based in San Jose, Calif. Endur's plans call for an underground data center of at least 81,000 square feet for ultra-secure hosting and disaster recovery for enterprise customers. Gen. Norman Schwarzkopf is on Endur's board of directors, and has been featured in the company's marketing. It's among a number of firms opting to build their own data center rather than buy a finished "plug-n-play" facility for 20 to 50 cents on the dollar.

If Endur decides on Kansas City, it would be the fifth major data center deal in Missouri in the past year, all involving centers of at least 80,000 square feet. In May, Reuters purchased a 100,000 square foot SAVVIS data center in St. Louis (with tenant) for $35 million, just days after DST Systems bought a former WorldCom data center in Bridgeton. Mo. for $15.7 million. In January, MasterCard paid $23.5 million to acquire a former Ameritrade data center in Kansas City, just months after Liberty Mutual moved into a similar 100,000 square foot site outside Kansas City, touting a total investment in excess of $80 million.

One explanation for interest in Missouri data centers is federal financial regulators' recent focus on "geographic diversity" for backup facilities for key Wall Street firms. Other advantages are the state's central location and Kansas City's history as a telecom hub.

But savvy local officials have helped seal the deals. A key ingredient in the Kansas City deals has been the city's use of Chapter 100 bond funding, which provided favorable terms for the MasterCard and Liberty Mutual deals. Chapter 100 incentives which would return 50 percent of the new income and property taxes generated by the project in return for a 10-year subsidy.