Data centre

IT estate v real estate

(Image: Stockfresh)

25 July 2016

Billy MacInnesThe recent planning appeal hearing over Apple’s desire to build a huge data centre in Athenry was dominated by claims and counterclaims on a number of issues, such as the potential effects of the facility on the environment and Ireland’s power consumption. But it also provided clear evidence of this country’s growing attractiveness as a place for companies to house their data centres.

In addition to Apple, Facebook, Google and Microsoft have already built data centres here and have plans to expand them. The attractions of placing data centres in Ireland extend beyond the usual criteria of a generous corporation tax rate, membership of the EU and an English-speaking population to include its temperate climate and geological stability. With the UK preparing to leave the EU, Ireland could become even more alluring as a location for US IT companies looking for a location for their European data centres.

One intriguing side effect of the data centre trend, assuming Ireland builds on its successes with Apple, Microsoft, Facebook and Google, is the potential to start to rebalance IT job creation away from the three centres of Dublin, Cork and Galway. Data centres frequently require greenfield sites and take up a lot more space than office facilities. As a consequence, they are unlikely to be sited in the same places where companies typically locate their regional sales and support offices. It would be phenomenally expensive – if not impossible given Dublin’s space constraints – to house Apple’s 166,000 square metre data centre there.

This suggests that companies looking to build substantial data centres in Ireland will need to look to other parts of the country for the best places to put them. And that creates an opportunity for jobs to be spread to other parts of the country.

Admittedly, data centres do not employ that many people when they are up and running. Apple’s director of global data centre services Robert Sharpe told the An Bord Pleanála, the company’s data centre will create 150 full time jobs “over the course of the development”. When you compare that to Apple’s Irish workforce of more than 5,500 employees it seems insignificant. But Sharpe argued the data centre would “bring significant investment to Galway”, and suggested it would attract the “further specialist enterprise development” that other data centres had done in other locations.

While Sharpe didn’t mention it during the hearing, the process of clearing the site and building the data centres will also provide jobs in construction, which are likely to be of great value for smaller towns. As Leo Clancy, head of technology, consumer & business services at IDA Ireland put it: “In a small town, data centres can be big employers in the construction phase and that’s where the hit to employment has been.”

At present, job creation and employment in Ireland are heavily skewed towards Dublin. As an indication, the Nevin Economic Research Institute found that although there was a greater spread of positive regional market performance than in previous years, more than half of the net employment gains in the country in the fourth quarter of 2015 were in the Dublin region. It warned the concentration on Dublin was “likely to carry implications for other policy areas, including population densities in rural areas and housing demand in Dublin and its hinterland”.

If Ireland succeeds in becoming an attractive location for more data centres, it won’t overturn the trend for multinational companies to create jobs in Dublin, Cork and Galway but it could help to mitigate it. However paltry the number of jobs may appear next to the announcement of the latest European headquarters for a US multinational, they will be incredibly precious to smaller towns, even more so if they bring additional “specialist enterprise development”.

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