The rapid growth of digital technologies has fueled an unprecedented demand for data storage and processing capabilities. As businesses, governments, and individuals generate enormous volumes of data, the need for efficient, scalable, and cost-effective data centers has become more pressing than ever. Texas, with its unique blend of economic, geographical, and infrastructural advantages, is emerging as a prime destination for data center investments in 2024. This blog post will explore the reasons why now is the perfect time to build and buy data centers across the Lone Star State, supported by relevant statistics and trends.

The Surge in Data Center Demand

The Global Context

The global data center market is experiencing robust growth. In 2021, the market size was valued at approximately $215 billion, and it is projected to reach $517.17 billion by 2030, growing at a compound annual growth rate (CAGR) of 10.9% from 2022 to 2030 . This surge is driven by the exponential increase in data generation, cloud computing adoption, and the expansion of Internet of Things (IoT) applications.

The Role of the United States

As a leading hub for technology and innovation, the United States is at the forefront of data center development. In 2021, the U.S. data center market was valued at around $59 billion, and it is expected to grow significantly in the coming years . Texas, with its strategic advantages, is poised to capture a substantial share of this expanding market.

Why Texas?

Economic Strength

  1. Robust Economy: Texas boasts the second-largest economy in the U.S., with a Gross State Product (GSP) of $2 trillion in 2023 . The state’s economy is diversified across key sectors such as energy, technology, manufacturing, and finance, which provides a stable foundation for investment.
  2. Business-Friendly Environment: Texas is renowned for its pro-business policies, including low taxes and minimal regulations. The absence of a state income tax and incentives for capital investment make it an attractive destination for businesses looking to reduce operational costs .

Geographical Advantages

  1. Central Location: Texas’s central location within the U.S. provides a logistical advantage for data centers. It offers easy access to major markets on both coasts and is well-positioned to serve Latin America, providing a gateway for international data traffic .
  2. Natural Disaster Resilience: Compared to other data center hubs like California, Texas has a lower risk of natural disasters such as earthquakes. While hurricanes are a concern in coastal regions, inland areas like Dallas and Austin offer relatively safer locations .

Energy Availability and Cost

  1. Abundant Energy Resources: Texas is the leading state in energy production in the U.S., with substantial reserves of natural gas and oil, and a growing renewable energy sector. The state produced more than 25% of the nation’s total energy in 2023 . This ensures a reliable and abundant energy supply for data centers, which are energy-intensive facilities.
  2. Competitive Energy Prices: The deregulated energy market in Texas promotes competition and keeps energy prices relatively low. In 2023, the average industrial electricity rate in Texas was about 6.53 cents per kilowatt-hour (kWh), lower than the national average of 7.16 cents per kWh .

Infrastructure and Connectivity

  1. Advanced Infrastructure: Texas has a well-developed infrastructure, including a vast network of highways, railways, and airports, which facilitates the transportation of equipment and personnel. The state is also home to major tech hubs like Austin and Dallas, which provide access to skilled labor and technological expertise .
  2. Connectivity: Texas is a key internet exchange point in the U.S., with significant data traffic passing through major cities like Dallas, Houston, and Austin. The state’s connectivity is bolstered by multiple fiber optic networks and direct access to major internet backbones .

Growth Patterns and Trends

Data Center Growth in Texas

  1. Increase in Data Centers: Texas has seen a significant increase in data center construction and investment. In 2023, Texas ranked second in the U.S. for new data center construction, following Northern Virginia . This trend is expected to continue in 2024, driven by the factors discussed above.
  2. Expansion in Major Cities: Cities like Dallas, Austin, and Houston are experiencing a surge in data center activity. Dallas, for instance, has emerged as a major data center hub due to its central location, robust infrastructure, and favorable business environment . In 2023, Dallas had over 250 data centers, with more projects in the pipeline .

Technology Trends

  1. Cloud Computing and Edge Computing: The shift towards cloud computing and the rise of edge computing are driving demand for data centers in Texas. As businesses move more operations to the cloud, the need for local data centers that can provide low-latency access to data and applications is increasing .
  2. Artificial Intelligence (AI) and Big Data: The adoption of AI and big data analytics is fueling the need for high-performance computing infrastructure. Texas, with its growing tech industry and access to affordable energy, is well-positioned to support the computational demands of these technologies .

Economic and Demographic Trends

  1. Population Growth: Texas is one of the fastest-growing states in the U.S., with a population that increased by 15.9% from 2010 to 2020 . This population growth is driving demand for digital services and, consequently, data centers.
  2. Economic Diversification: The Texas economy is becoming increasingly diversified, with growth in sectors such as technology, healthcare, and finance. This diversification is creating new opportunities for data center development to support the digital infrastructure needs of these industries .

Case Studies of Data Center Investments

Google’s Data Center in Midlothian

In 2019, Google announced a $600 million investment in a data center in Midlothian, Texas. This facility is part of Google’s broader strategy to expand its cloud infrastructure and improve service delivery across the U.S. The Midlothian data center benefits from Texas’s competitive energy prices and favorable business environment, making it a cost-effective choice for Google’s expansion .

Facebook’s Data Center in Fort Worth

Facebook (now Meta) invested $1 billion to build a data center in Fort Worth, Texas, which became operational in 2017. The facility is powered entirely by renewable energy, highlighting Texas’s potential for sustainable data center development. The Fort Worth data center has created numerous jobs and contributed significantly to the local economy .

Digital Realty’s Expansion in Dallas

Digital Realty, a leading provider of data center solutions, has significantly expanded its presence in Dallas. The company’s Dallas campus, known as Digital Dallas, includes multiple data centers that support a wide range of customers, from small businesses to large enterprises. Digital Realty’s investment in Dallas underscores the city’s status as a major data center hub .

The Future of Data Centers in Texas

Sustainability and Renewable Energy

  1. Emphasis on Green Data Centers: There is a growing emphasis on sustainability in the data center industry. Texas’s abundant renewable energy resources, including wind and solar, provide an opportunity to develop green data centers that minimize environmental impact. In 2023, Texas led the U.S. in wind energy production, generating over 35,000 megawatts of wind capacity .
  2. Energy Efficiency Initiatives: Data center operators in Texas are increasingly adopting energy-efficient technologies and practices to reduce operational costs and environmental footprint. Innovations such as liquid cooling and AI-driven energy management systems are becoming more prevalent in Texas data centers .

Technological Innovations

  1. 5G and Edge Computing: The rollout of 5G technology is expected to drive further demand for edge computing and local data centers in Texas. These facilities will support the low-latency requirements of 5G applications and services, enabling faster and more reliable data processing .
  2. Quantum Computing: Texas is emerging as a hub for quantum computing research and development. As quantum computing becomes more commercially viable, the demand for specialized data centers to support this technology will increase, creating new opportunities for investment in the state .

Economic and Policy Support

  1. Government Incentives: The Texas government offers various incentives to attract data center investments, including tax exemptions and grants. For example, the Texas Data Center Program provides sales and use tax exemptions for data center equipment purchases, making it more cost-effective to establish and expand data centers in the state .
  2. Continued Economic Growth: Texas’s economy is expected to continue growing, driven by factors such as population growth, economic diversification, and technological innovation. This economic growth will create new opportunities for data center development to support the state’s expanding digital infrastructure needs .


In 2024, Texas stands out as an ideal location for building and buying data centers, thanks to its robust economy, favorable business environment, abundant energy resources, and strategic geographical advantages.

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