The story shows that, like in all real estate, finding a home for your servers is all about location, location, location. In this case, it’s not school districts or an urban core drawing customers — it’s proximity to data. As we’ve explained, there are benefits to locating auxiliary data and services in close proximity to big repositories of financial data. It can keep latency (and bandwidth costs) low, while making big-money trades as speedy as possible and rapid data analytics as close to real time as can be.

The law of data gravity at work in New Jersey, where major data center construction and expansion has been forecast, has also played out to some extent in northern Virginia, where Amazon Web Services’ US East infrastructure runs, as well as in New York, even with the superstorm Sandy.

Beyond reporting the New Jersey phenomenon, the Times shows that the circumstances are ripe for data center operators such as Digital Realty Trust and Equinix to function as quasi-utilities, even though they are not regulated as utilities. They negotiate power deals with utilities and then resell power to customers that want to run servers inside the data centers. And the data center companies can post robust profits when customers agree to pay for, say, double the amount of power they typically use.

As much as those profits might bode well for Equinix and their ilk, power could turn out to be an issue. Energy costs could increase, and outages can happen, but also, as the article points out, demand for power, in New Jersey and elsewhere, could keep increasing beyond the capacity of the data centers, which means that the data center companies might not be able to use their facilities completely effectively.

It could be that data gravity begets data center construction. If that’s the case, places such as New Jersey could see data center construction for years to come.

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I saw this up close while working as a business reporter at the Bulletin daily newspaper in Bend, Ore., a 45-minute drive from Prineville, where Facebook and Apple have been constructing data centers and where other companies have considered building similar structures.

To me, the arrival of the data centers turned Prineville’s folksy mayor, Betty Roppe, into an advocate and a celebrity. What’s more, her city has become known as a destination for cloud computing.

Like Prineville, data center meccas Loudoun County, Va., and Quincy, Wash., have also gone through changes — an economic-development focus, a housing boom and at least one environmental issue.

Prineville, Ore.

Nine thousand two hundred fifty-three people called Prineville home in 2010, according to U.S. Census data, and the mayor, Betty Roppe, doesn’t make it seem bigger than it is. She’s proud of her city for attracting Apple and Facebook, and at the same time she’s not afraid to be honest about not being tech-savvy.

Sen. Jeff Merkley of Oregon, left, and Prineville Mayor Betty Roppe

“I’m kind of in that senior-citizen group that’s not as comfortable with computer systems,” said Roppe, adding that while she has signed up for Facebook, she doesn’t use cloud-storage products such as Dropbox and Evernote.

But on Facebook, Roppe is a friend of Ken Patchett, the manager of Facebook’s Prineville data center. She’s even taking care of Patchett’s border collie now that Patchett lives in a place where dogs are not allowed, she said.

In 2011 she appeared alongside a Facebook executive to promote Facebook business profiles. She came on stage at the Facebook data center’s grand opening that year, suggesting local approval of the social networking site’s presence. And she’s gone to Washington, D.C., three or four times to show support for federal legislation that would ensure water and hydroelectric power access for the city — two resources that data centers covet.

The city of Prineville is considering the construction of a roundabout to ease traffic near the Apple and Facebook data centers.

Reporters from the New York Times, Dow Jones Newswires and Data Center Knowledge have quoted her, while The Economist, Wired, GigaOM and other media outlets have visited her city.

In addition to the sudden media interest, the city has seen other changes. Prineville city planning staffers have dealt with legal matters stemming from executives’ concerns about regulatory issues in play in California. And additional traffic on nearby state Highway 126 has caused the Oregon Department of Transportation to enforce a 45 mph speed limit, down from 55 mph, east and west of the roads leading to the Facebook and Apple data centers. Prineville officials are even discussing the construction of a roundabout to ease traffic (see map).

Quincy, Wash.

When people in Prineville talk about wanting to add more data centers, they were sometimes thinking of Quincy, Wash.

Quincy, a five-hour drive north of Prineville, is home to about 7,000 people and five data centers — Microsoft, Yahoo, Intuit, Dell and Sabey Corp. — with a sixth from Vantage Data Centers in development.

Quincy Mayor Jim Hemberry

Over the years, the increased sales tax revenue has helped the city build a library, purchase a new ladder truck for the fire district serving Quincy and add a bevy of additional equipment for the Quincy Police Department, said Mayor Jim Hemberry.

Property tax revenue from the data center operations has allowed the city to add employees, even through the economic recession, the mayor said.

The data center cluster “hasn’t been an issue that has affected the (Quincy) population in any negative way, in my opinion,” Hemberry said.

If anything, the rise of Quincy as a data center hub has brought attention from other industries, contributing further to the city’s employment base and economic diversity.

Plus, he said, “We’ve had a lot of new housing starts.” In a typical year, five to 10 homes are built. Now, it’s more like 400 to 500.

But just because a data center goes up in city doesn’t mean the mayor becomes an advocate. Patty Martin, a former mayor of Quincy, has become a prominent critic of data centers’ nearby backup diesel generators, which appear to cause air pollution. She has challenged Washington’s Department of Ecology on its decision to grant permits for Microsoft to build more generators. Hemberry declined to comment on the issue.

Loudoun County, Va.

AOL was the first company to construct a data center in Loudoun County, Va., in 1997. Then came Equinix Inc. and MCI Worldcom, which Verizon Communications Inc. acquired. But only in the past six years has northern Virginia become a hot spot for data centers, and collocation specifically, said Buddy Rizer, assistant director of the county’s economic-development department. (North Carolina, which shares a border with Virginia, has also seen an influx in data centers, as my colleague Katie Fehrenbacher reported in a four-part series.)

Buddy Rizer, assistant director of Loudoun County’s economic-development department

Rizer himself has gone from a general-purpose economic-development staffer with an IT bent to focusing nearly exclusively on data center retention and recruitment. Rather than send out county supervisors to communicate with data center operators, the elected officials have Rizer take care of it.

Today the county boasts 8 million square feet of data centers in operation or under construction and sees as much as 70 percent of all internet traffic flying through its facilities, according to a county fact sheet. Big cloud providers such as Amazon Web Services and Rackspace keep servers in Ashburn, among other places.

Given all of that progress, Rizer said he travels to other states and countries to talk about the county’s achievements in data-center development.

When asked where the data centers lie inside the county, Rizer said, “Primarily they are in Ashburn, but, even more concentrated than that, they’re in place that we call Data Center Alley, up and down Loudoun County Parkway and in the area of Waxpool.” And yes, he did come up with the name Data Center Alley.

Over the years, the county has streamlined the process of building a data center there with a “Fast Track for Priority Commercial Development.” Staffers have lined up the right zoning for potential development sites, and county supervisors have showed support for expanding exemptions of Virginia’s sales and use taxes on new computer equipment.

On top of it all, the county has moved most of its documents to a private cloud, Rizer said.

“If you’re out selling yourself as a technology location, you want to make sure that you can walk the walk and talk the talk,” he said.

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Up until now, more than half of Box’s claimed 14 million customers were outside the U.S. but all of its data center capacity were there. Now, Box will also run in Equinix IBX data centers in Chicago, Ashburn, Virg., Amsterdam, Sydney, Hong Kong and Tokyo, the company said. Using Equinix, Box said it can boost performance for those customers by 60 percent.

Equinix IBX facilities claim state-of-the-art energy efficiency, HVAC (heating, ventilation, and air conditioning) and fire-suppression systems. And they house multiple carriers, networks and internet service providers (ISPs).

That proximity makes it easy for IBX tenants to work with each other. It also helps that many of the big businesses that Box targets also run in these data centers. In a statement, Stefan Apnitz, Box’s VP of operations pointed out the advantages of that:”Having our largest customers just a cross connect away [from us] helps us forge stronger business relationships.”

This news comes two months after the Los Altos, Calif.-based Box launched several international endpoints in Amsterdam, Sydney, Tokyo, Singapore, Hong Kong and Sao Paolo to speed up file uploads for customers outside the U.S.. It is unclear whether those are also Equinix facilities.

The fallout from Superstorm Sandy illustrates the need for businesses to use multiple data centers across geographies. And, given latency issues, any cloud service provider that wants to serve customers around the world needs to offer access close to those customers. This Equinix deal apparently fulfills both requirements for Box.

Earth photo courtesy of Flickr user DonkeyHotey

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• There were sporadic issues with undersea cable Atlantic Crossing-2 (or AC-2), sources said. These cables are the main data lifelines between continents.
•  Telx reported that most of its New York and New Jersey data centers were on generator power as of 9:30 a.m. EDT.
• As feared, 75 Broad Street, which houses several data centers in the low-lying Zone A of Manhattan, was severely impacted, affecting Internap, Peer 1 and other providers.
• INIT7, a Swiss provider of IPv6 infrastructure, was affected by a storm-related power outage at Equinix’ 8th Avenue facility in Manhattan.  The company also reported connectivity issues to Miami and Los Angeles that have since been resolved.
• Equinix reported widespread issues with its data centers in the areas around NYC, but said they all have 48 hours of fuel
•  A Navisite data center in Manhattan’s Zone A is also running on generators. It has refueled and has enough to last 72 hours and will refuel as needed.

Lobby at Verizon office at 140 West Street, New York.

The specter of trouble with the undersea cables could be a huge deal, although experts said that there is so much redundancy that much of the risk is mitigated.  There were some reports attributed to cable operators who said they had experienced power issues but back-up generators prevented service disruption.

Update: (5:30 p.m. EDT) Level 3 Communications, just emailed a statement about the status of the AC-2 cable:

“We made extensive preparations in advance of the storm and have experienced no major service disruptions. All of our subsea cable systems are operating normally. We have experienced a minor fiber cut to one of our diversely routed, secondary backhaul lines which provides connectivity to our AC2 Cable Landing Station, and our technicians are currently working to repair it as quickly as possible. Few customers were affected because most traffic was rerouted through redundant lines. And again, the AC2 subsea cable itself is operating normally.”

Carriers and ISPs use the cables to pump data across the Atlantic. Two of the major gateways are in Brookhaven, N.Y., (on Long Island) and in northern New Jersey, where the cables come ashore. “Given the duration and strength of this storm, you have to worry about the cables getting disrupted,” said an executive with a data center company who did not want to be named. He said problems with the cables is “ the kind of thing companies will keep close to the vest. If  either AC-1 or AC-2 were to go out there would be major, major issues.”

As already reported, data center facilities in lower Manhattan suffered a string of outages after flooding and Con Ed cut electrical power. Datagram, the web hosting company that serves the Huffington Post, Gawker, Gizmodo and BuzzFeed, went down Monday evening after flooding caused those sites to go dark. Data centers at Google-owned Carrier Hotel on 8th Avenue, including Equinix, XO Communications and others were also reportedly affected by power outages, though it appears some are back up and running. And Atlantic Metro Communications also reported disruptions due to flooding at a New York data center.

Ryan Kim contributed to this post.

Cable map courtesy of Telegeography; flood photo courtesy of Verizon.

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Data center operator Telx will break ground soon on a 215,000-square-foot data center next to its existing facility in Clifton, N.J.

The new Clifton Cloud Connection Center will be Telx’s 16th facility in the U.S. and bring its total data center space to over 800,000 square feet, said Eric Shepcaro, CEO of New York City-based Telx. It will offer more than 100,000 square feet of customizable colocation space.

The build-out of advanced, energy-efficient data centers with dense connections to communications pipelines is critical as businesses demand fast, low-latency connectivity for transactional applications and consumers flock to social media, video and mobile applications. The tolerance for slow or no connectivity has disappeared.

“The biggest data center choke point today is not compute and not storage; it’s the network,” Shepcaro said. “With more mobility and machine-to-machine communication, with high-frequency trading and video, our differentiator is our networking,” he said. The facility will target customers wanting to deploy hybrid cloud solutions and will encourage them to use services of other data center customers colocated at the site.

The new Telx facility will tap into the company’s existing interconnection services. Telx’s existing Clifton facility, as well as another data center in the iconic 60 Hudson St. building in Manhattan, serves many New York City metro area clients in financial services and other industries. The new facility will connect directly to its Clifton neighbor, 60 Hudson and another Telx data center on Manhattan’s 8th Avenue.

The facility will feature customizable pods with varying power densities and will be built to LEED specifications, the company said.

Telx, which competes with Equinix, Savvis(now owned by CenturyLink and Terremark (now owned by Verizon), is also adding 20,000 square feet to its existing Clifton facility which serves the New Jersey/NYC metro area, Shepcaro said.

Telx filed for a $100 million IPO in March 2010, but shelved those plans. In August,it agreed to be purchased by private equity firms ABRY and Berkshire Partners in a deal that closed a month later.

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Data centers are becoming the market exchanges of the new digital economy, so the closer a business can put its data — and compute power — to its users and partners, the better.

That’s the thinking behind the new Equinix Marketplace. Equinix, the big data center services provider, built the online marketplace to help its data center customers — which include SaaS companies, managed service providers and financial services outfits — expand into new markets and tap into an existing battery of potential partners that already use those data centers, according to Jarrett Appleby, the chief marketing officer.

Equinix fields 99 data centers in 38 markets in the Americas, Europe, Middle East and Asia. It claims 4,000 business customers.

Partnering with partners that use the same data center is not new, and Equinix even helped match-make some customers in the past, but in an ad hoc way. The online market should give these customers easy click-through menus to find potential partners based on geography and the type of services needed, Appleby said.

“You can say, look, I’m a Rackspace OpenStack customer in Singapore and I want to add this sort of service. Who can I work with that’s already in my data center?” he said.

The Equinix effort follows other work that big data center hosts have done to cut latency times and boost throughput for business customers. In August, Amazon Web Services Direct Connect program gave large data center services companies, including Equinix, a fat, fast direct pipe into AWS.

Equinix sees an opportunity, given the demographics of its customer base. “Now more than half of our business is with customers who use us in multiple regions and 60 percent are businesses who use us in multiple countries, up about 10 percent from last year,” Appleby said.

If a business wants to expand into new geographies, it can do so faster if its data center provider is already local to the new venue and the business can utilize connections already in place, Appleby said.

He cited an example of Bloomberg L.P., a big financial services firm that initially wanted to launch a new service in Chicago and New York. “But then they figured, why not do that globally? We helped them get into ten markets in less than a year.”

Photo courtesy of Flickr user DeclanTM

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