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Switch says construction begins now on $5B Michigan data center

 

 

GRAND RAPIDS, MI – The Switch is on. West Michigan business leaders woke up in the mood to celebrate on Wednesday, Dec. 16.

 

It was the morning after a late night session in which the state legislature approved tax breaks aimed at attracting the largest data center in the eastern United States to the former Steelcase pyramid.

"Today, Michigan not only welcomes Switch, it welcomes an entire industry to the state," said Birgit Klohs, President and CEO of The Right Place.

"We have just made a very big play to play on the digital highway," said Klohs, who has spent much of the past two months in private negotiations between executives of Nevada-based Switch and state lawmakers.

With the tax legislation, West Michigan will be able to welcome a new growth industry that other states have been seeking, said Klohs. "I look at this as a catalyst."

With Switch, West Michigan has landed the "Google" of the data center industry, Klohs said. The legislation also shows innovators that Michigan is open to new ideas and new industries, she said.

"I often remind our partners in the region that economic development is a team sport," Klohs said. "This project epitomizes this. Without the assistance and support of countless elected officials, business and community leaders, Switch would not be coming to West Michigan."

Adam Kramer, executive vice president of strategy for Switch, said the Nevada-based company soon will start construction in Grand Rapids on "the largest data center ecosystem in the eastern United States."

Switch will take over the former Steelcase Corporate Development Center, an iconic pyramid-shaped building at 4100 60th St. SE in Gaines Township that as been empty since 2010. The seven-story building was purchased in May by Norman Properties LLC, which owns the Tahoe Reno Industrial Center where Switch is building a $1 billion data center.

 

The new "SuperNap" data center will establish the beginning of a 2 million-square-foot, state-of-the-art, high-tech campus in West Michigan, Kramer said. The center will serve the company's current clients in geographic redundancy and new clients with national connectivity.

Switch's 1,000 clients include eBay, Intel, Shutterfly, Machine Zone ("Game of War"), Amgen, Dreamworks, HP, Intuit, Hitachi, JP Morgan Chase, Sony, Boeing Cisco, EMC, Google, Amazon, Time Warner, Eli Lilly, Activision ("Call of Duty") and Fox Broadcasting, among many others.

 

The project is expected to create more than 1,000 IT jobs in Gaines Township. Switch sets minimum starting wage for SuperNap jobs at $15 per hour, plus benefits, and says most of its data center jobs pay between $60,000 and $200,000 a year.

Switch says it has planned a $400 million construction budget to start, and anticipates exceeding $2 billion as the site grows over the next decade, relying primarily on local subcontractors. Planning and work at the Gaines Township site will begin immediately, the company said in a statement Wednesday morning.

"The actions taken tonight will put Michigan on the map for rapidly growing, high-tech industries," said Rick Baker, President and CEO of the Grand Rapids Area Chamber of Commerce, after the tax code changes passed the state House and Senate late Tuesday night.

"This legislation is a game changer. It makes our tax structure competitive with other states, setting the stage for increased investment and the attraction and retention of high-tech talent," said Allie Bush, Director of Government Affairs at the Grand Rapids Chamber.

"We look forward to celebrating this success, with the Governor's signature on this legislation," Baker said.

Gaines Township Supervisor Don Hilton Sr. said Switch will enter a welcoming environment if it applies for a tax exemption on its property taxes and other accommodations.

"I think we always have been open for business and will work with any company that comes in," said Hilton, who has been the township's supervisor for 23 years.

Aside from a brief conference call with Switch executives that was arranged by The Right Place, Hillton said he has not been in contact with Switch nor has he received any requests for tax breaks.

"In making a request for zoning changes and whatever that may be, it's just necessary to follow the proper procedure and we'll work through it through the normal course of meetings and final consideration.

While the arrival of Switch may enliven the demand for real estate in Gaines Township, Hilton said his community has enough land available for expansion.

"It may not happen overnight, but I think in the next few years, we'll see a significant change in the area."

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