By Jason Utton and Courtney Schmidt
The rapid growth of the digital economy has intensified the need for strategic data center locations that meet operational, economic, and sustainability requirements. Selecting a site for a data center involves evaluating a multitude of factors, including proximity to reliable power, access to cooling systems, real estate viability, fiber connectivity and scalability. Balancing these considerations is essential for ensuring long-term success.
Michigan: Poised to become a data center destination
Michigan’s trajectory as a potential data center hub has been bolstered by recent legislative action. The Michigan Legislature has passed a bill offering significant tax incentives to attract large data centers, placing the state in direct competition with others that already host major tech investments.
The new legislation exempts enterprise data centers from sales and use taxes on equipment until at least 2050, with an extension to 2065 for facilities developed on brownfield sites. To qualify, operators must invest a minimum of $250 million and create at least 30 jobs paying 150% of the local median wage. These measures align Michigan with 30 other states offering similar tax breaks.
Why Michigan? Key advantages for data centers
1. Reliable and diverse energy supply
Michigan’s diverse energy portfolio includes renewable sources such as wind, solar, and hydropower, alongside traditional natural gas and nuclear energy. Access to robust backup systems and expanding grid infrastructure positions the state as a reliable partner for power-intensive data center operations.
2. Abundant water resources
Cooling remains one of the largest operational challenges for data centers, with many facilities requiring millions of gallons of water daily. Michigan’s extensive freshwater resources provide a natural advantage, enabling the adoption of sustainable cooling systems without straining local water supplies.
3. Strategic tax incentives
The recent tax incentives significantly lower the cost of doing business, making Michigan more competitive for hyperscalers like Google, Meta, and Microsoft. These incentives also support investments in brownfield redevelopment, aligning economic growth with environmental remediation.
4. Expanding fiber infrastructure
High-speed fiber connectivity is critical for data centers, and Michigan’s ongoing investments in its telecommunications infrastructure enhance its attractiveness to operators requiring redundancy and low latency.
Balancing opportunities and challenges
While Michigan offers numerous advantages, challenges remain. Critics of the new legislation point to the substantial energy and water consumption of data centers, which could impact Michigan’s clean energy goals. Large facilities often consume between one million and five million gallons of water daily and require vast amounts of electricity. However, these challenges also present opportunities for innovation.
By integrating renewable energy sources and water recycling technologies, Michigan has the chance to position itself as a leader in sustainable data center operations. Utilities and developers could modernize the electrical grid, expand renewable capacity, and invest in advanced cooling systems that minimize environmental impact.
Key considerations when identifying a data center location
The decision-making process for selecting data center locations revolves around four primary factors:
1. Reliable energy and connectivity
Consistent energy supply, access to multiple ISPs, and redundant connectivity paths are non-negotiables for uninterrupted operations. Michigan’s energy infrastructure and expanding fiber network meet these demands.
2. Stable climate and natural disaster risk
Michigan’s low risk for earthquakes, hurricanes, and floods provides a stable environment for data centers, minimizing downtime risks. The state’s climate also supports free-cooling technologies, further reducing operational costs.
3. Infrastructure and scalability
Proximity to clients, robust utility access, and physical space for expansion are critical. Michigan’s combination of abundant land and natural resources ensures long-term scalability for operators.
4. Regulatory environment and security
Michigan’s political stability and new tax incentives create a favorable regulatory climate. With the rise of data privacy concerns, operators in Michigan can align with Uptime Institute standards, LEED certifications, and other compliance frameworks.
The future of mission critical development in Michigan
As Michigan positions itself to attract large-scale data center projects, the state stands at the intersection of technology, sustainability, and economic growth. The incentives provided by the recent legislation, coupled with Michigan’s natural advantages, pave the way for transformative investments in the digital infrastructure sector.
Atwell is uniquely equipped to guide clients through the complexities of mission-critical development. Our Mission Critical Advisory Board leverages Atwell’s national reach, technical expertise, and strategic relationships to offer innovative solutions tailored to this dynamic market.
Looking ahead, our 2025 Mission Critical Summit will bring together leaders from power providers, government agencies, construction management firms, and industry hyperscalers to discuss strategies for driving growth and innovation.
As a firm with deep roots in Michigan, Atwell is proud to support the state’s emergence as a hub for mission-critical infrastructure. By integrating sustainability, scalability, and economic impact into our approach, we are helping Michigan, and our clients, realize the potential of a data-driven future.
