Multibillion-dollar data center campus proposed in Williamson County secures incentives

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Jul 26th, 2023

Site would be one of the largest of its kinds in U.S.

One of the region’s biggest economic development projects has secured public incentives.

Skybox Datacenters LLC and Prologis Inc. — which are teaming up to build the 159-acre PowerCampus Austin — on July 20 were approved by Hutto City Council for the project. The data center campus could eventually total 3.9 million square feet across six buildings in a portion of Hutto’s “megasite,” a huge but undeveloped tract where big businesses could land along U.S. Route 79. For context, the largest U.S. data center is a Meta Platforms Inc. facility in Oregon that spans 4.6 million square feet, Institutional Real Estate Inc. reported earlier this year.

The agreement, codenamed “Project Skybox” in economic development discussions, with Hutto Data Center LLC notes that the intended capital investment on the project is at least $10 billion. Through a Chapter 312 incentives agreement, the city is poised to exempt 50% of the taxable value of personal property, as long as the developers hits a capital investment minimum of at least $100 million. The 10-year-agreement begins Jan. 1 in the year following completion of construction.

An updated timeline has not been given for construction, but the site was last month annexed into and zoned by the city of Hutto, along with 62 acres that San Francisco-based Prologis sold in November to Oncor Electric Delivery Company LLC. Executives have previously said the campus will be developed in phases, with the first phase delivering as early as the last quarter of 2024.

“Skybox and Prologis continue to work closely with the City of Hutto to create a world class data center campus in the heart of Central Texas,” Rob Morris, CEO of Dallas-based Skybox, said in a July 11 statement to Austin Business Journal, before the incentives vote. “This new 312 program with the City will further enable our project to be attractive to the very best customers globally.”

Information about the project has trickled out since ABJ first reported last year that Skybox and Prologis (Nasdaq: PLD) purchased the land for the data centers in Hutto. The city — about 30 miles northeast of downtown Austin, with a population of around 31,000 — has taken steps to entice development along U.S. 79. Some site selection experts put this stretch of road among the most-desirable in the country.

Data centers are massive hubs for computer processing power and are used by many companies and industries. They’re commonly called “the cloud.” While they don’t create many long-term jobs, they do add a lot of value to a city’s tax rolls because of the large amounts invested in the sites. Developers have said it’s too early to estimate how many full-time jobs will be created at the campus but said they will be high-wage engineering and technical roles.

Dallas-based Skybox and Prologis in May secured a development agreement for the project. The agreement between the city and Hutto Data Center LLC clears the way for the companies to build a roughly 600-megawatt campus on about 159 acres at the southeast corner of U.S. 79 and County Road 132. Roughly 600 megawatts is enough to power about 450,000 homes.

The development agreement stipulates that the developers will build a 1.5-million-square-foot data center campus, which may also include industrial and warehouse buildings and ancillary buildings. The EDC and Council also previously approved roughly $150,000 in funding for infrastructure at the site.

Executives have said they’re building the project speculatively, meaning there are no tenants signed on, although they are speaking with potential users.

“This 150-acre campus will contribute to the local economy and build upon North Austin’s growing reputation as a world-class location for digital infrastructure,” JC Witt, Prologis vice president of investments, said in a May statement. “The project will offer 600 megawatts through two private substations — making it one of the most scalable data center campuses in the United States. We’re proud of our long-time commitment to developing and operating sustainable buildings and PowerCampus Austin will be LEED certified with solar and EV charging infrastructure.”

Elsewhere in the megasite, New Mexico-based Titan Development Ltd. is creating the 188-acre Hutto Mega TechCenter, which could have 2 million square feet of speculative high-tech industrial space. Joe Iannacone, Austin parter for Titan, said earlier this month the company plans to start construction by the end of the 2023, with the first building being delivered by the third quarter of 2024.

On July 5, Council narrowly approved $18 million for the construction of an east-west road through the megasite during a July 5 meeting after the amount was upped from about $12 million. That was to account for additional wastewater and water line and detention pond construction. Bob Farley, Hutto’s economic development director, said earlier this month that preliminary site work was underway and the goal is to complete construction of the road next year.

Farley also said the megasite was helping Hutto attract the technology and industrial sectors, and that the megasite was an alluring destination for companies that supply Samsung Electronics Co. Ltd., which is building a multibillion-dollar factory mere miles away in Taylor. He said two Samsung suppliers are already looking at about 70 acres of the megasite.

Skybox and Prologis have already teamed up on a $548 million data center on roughly 20 acres in Pflugerville called “Skybox Austin 1.” The 141,000-square foot, 30-megawatt data center at the northeast corner of New Meister and Meister lanes is expected to create 10 full-time primary jobs. Interior finishes are underway.

In November, Morris said the Central Texas campus will be the largest in his company’s portfolio, which currently stretches across six markets, including a 560,000-square-foot complex under construction in Santa Clara, California, according to the Skybox website.

Editor’s note: This story has been updated to clarify the the minimum capital investment for PowerCampus Austin needed to qualify for incentives with the city of Hutto.

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