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Sunday, 10 January 2016 22:24

Decade-long data center project could boost backlog for West Michigan contractors

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Las Vegas-based Switch Communications Group says the buildout of its SuperNAP cloud-based data center could cost at least $400 million. Local contractors are watching closely for more information about the project as they hope to bid on the construction work, which is expected to last up to a decade. Las Vegas-based Switch Communications Group says the buildout of its SuperNAP cloud-based data center could cost at least $400 million. Local contractors are watching closely for more information about the project as they hope to bid on the construction work, which is expected to last up to a decade. COURTESY PHOTO

GAINES TOWNSHIP — With state tax changes secured, Switch Communications Group LLC now turns its attention to the decade-long buildout of its $5 billion cloud-based data center in southern Kent County.

While West Michigan contractors welcome the large construction project, they say the scale of the project could also pose a handful of challenges, especially given the tight labor market in the skilled trades sectors.

The Las Vegas-based data center operator plans to build the largest co-located “SuperNAP” data center east of the Mississippi River at the former Steelcase-owned pyramid building in Gaines Township. The company has said the multi-phase construction project could cost at least $400 million.

The project would allow for Switch’s 1,000 clients — which are said to include tech giants like Google, Amazon and eBay — to set up billions of dollars worth of servers in the region, as well as bring in some of their staff to oversee operations.

But just who will build the project remains largely unknown, despite Switch saying it would begin site work immediately following the passage last month of tax policy changes that exempt the company and its clients from sales and use tax.

“Planning is well underway for the buildout and operation of SuperNAP Michigan, and key decisions and other project details are forthcoming (in) early 2016,” Switch spokesperson Roger Martin said in an email to MiBiz.

Construction industry sources acknowledge that a project of this size often requires a joint venture between a large out-of-state general contractor and a local construction manager.

“It would make sense to bring in someone they know, but it also makes sense to partner with someone local,” said Norm Brady, president and CEO of the West Michigan chapter of Associated Builders and Contractors (ABC), a trade association.

“But I’m sure there will be opportunities for all the trades,” Brady added.

To Brady’s point, executives at construction companies with experience in data center projects say the buildouts typically require myriad trades and specialty subcontractors. Specifically, data center projects require heavy concrete, large mechanical systems and significant power capacity, said Glenn Granger, president and CEO of Granger Construction Co., a Lansing-based contractor that has worked on several data centers in Michigan.

Because the energy-intensive data centers need to be cooled and kept running around the clock, the buildings require a number of sophisticated construction processes and systems, according to Granger.

“It’s a very specific technology and skill set to bring it all together,” Granger told MiBiz, adding that systems in data centers such as the one proposed by Switch must be operational at all times. “It’s an intricate system with multiple redundancies. When they crash, they can’t afford to have any downtime.”

According to early renderings released by Switch, three large facilities would be constructed on the site, situated around the existing 680,000-square-foot pyramid building.

Sources in the data center industry say that the pyramid building — previously a Steelcase data center — already contains the necessary infrastructure for such a project — including raised floors and fiber infrastructure.

Data center industry sources said Switch would need to make sure all the technical infrastructure and power capacity is in place prior to physical construction of new buildings.


BUSY DAYS AHEAD?

While a Switch spokesperson could not offer a timeline for site work to begin in Gaines Township, construction industry sources say they welcome the project and hope for the opportunity to work on the large-scale data center the company has proposed.

Switch’s West Michigan project will take shape during a busy time in the overall construction industry. According to a mid-December report from the national chapter of ABC, the Construction Backlog Indicator (CBI) stood at 8.5 months for the third quarter of 2015, although the backlog in upper Midwest states such as Michigan was about two months less.

Coupled with a lengthy backlog of projects, many contractors say they find themselves with a shortage of skilled workers across many of the trades, but not to the point that it would hinder their ability to complete the necessary work on a project the scale of which Switch has proposed.

In fact, both Brady and Granger said that such a large-scale project would allow contractors to better manage their workflow.

“Contractors need anchor jobs,” ABC’s Brady said. “Big projects have the ability to be a cushion and give more opportunities to manage manpower. Contractors love to have the anchor projects to handle the ebbs and flows.”

Granger agreed, noting that handling large, lengthy projects requires skillful management but also allows contractors to really focus on talent development.

“A project of that scale can cause you to be creative in what you bring to the market,” he said.

Read 7299 times Last modified on Monday, 11 January 2016 12:58

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