Do you know that, according to Axios Dallas, Texas witnessed a 38% increase in data center jobs between 2018 and 2024 alone? And perhaps surprising, Dallas and four other cities accounted for over three-quarters of the state’s overall data center employment in Q2 2024. This should tell you something: Dallas is actually rising to be a premier data hub, not just in the US but also worldwide.
CBRE recently noted that the popular Dallas-Fort Worth data center market could double by 2026. While it may be popular to some because of its renowned museums and world-class restaurants, Dallas is quickly becoming America’s top destination for data centers. It’s now one of the country’s fastest-growing places to park racks of servers and build hyperscale campuses.
What makes Dallas data center facilities appealing is their mix of scale and accessibility. Enterprises can tap into massive colocation campuses with direct cloud on-ramps while also benefiting from the city’s strategic location. Read on to learn more about why this city is a favorite for the ‘physical’ internet.
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Is Location Beneficial for a Premier Data Hub?
This city sits at a geographic sweet spot, central enough to link coasts. It’s also close to major population centers across the Sun Belt and on major routes to Latin America. This suitable location ensures Dallas can provide fast, low-latency connections to major markets across North America, making it ideal for businesses with national operations.
And when it comes to data centers, the importance of latency can never be overstated. When it is low, online activities are quick and smooth, but when latency is high, the vice versa happens. But high latency is not something you want in this fast-paced world, where speed is a favorite for many. For instance, are you aware that, according to OuterBox, just a second of website delay can reduce conversions by up to 7%?
This is where proximity to data centers comes into play. The closer you are to them, the faster information travels between devices and servers. And given that Dallas is more central for national businesses, it makes sense to see big network operators building dense fiber backbones here.
Powerful Infrastructure Features
Powering data centers is no joke. According to findings by MIT Technology Review, the United States now channels over 4% of its energy to these facilities. Things began to change significantly in 2017, when AI started penetrating this industry. The need to build data centers with energy-intensive hardware suited for AI led them to double their electricity consumption by 2023.
This means that for a facility to work efficiently, there must be a reliable power supply. And thanks to multiple utility providers like Oncor and TXU Energy, Dallas enjoys a more stable electricity supply than many other regions. But that doesn’t mean there haven’t been any challenges. On days when weather conditions are extreme, some energy sources like wind and solar can fail, leading to a low supply that may negatively affect the operation of data centers.
It’s part of why sustainability-conscious individuals have been advocating for the shift to nuclear, which is energy-dense and scalable. However, amid these energy challenges, Texas still leads the nation in renewable energy production. Just last year (2024), it added about 9,700 megawatts of solar and over 4000 megawatts of battery storage. Such developments mean that energy-intensive projects can operate optimally without failing.
More Infrastructural Benefits
Another aspect that many people may overlook is how exposed an area is to natural risks. Disasters like earthquakes and hurricanes can have devastating effects on data centers. According to vaulttek.com, such weather-related events are responsible for up to 30% of all data storage center outages. Well, in Dallas, natural events like hurricanes are not common, making it attractive for building facilities that need to operate consistently.
The region’s extensive transport network, including DFW International Airport, makes accessing data centers easy. Excellent transport connections are especially handy for hardware delivery and maintenance. With existing industrial spaces in the DFW metroplex, the city ensures data centers can scale more efficiently.
Also, don’t forget that the city houses major internet exchanges and data carrier hotels. Infomart, for instance, has been a marketplace for technology vendors since the late 20th century.
What About Tax Incentives?
Establishing a large group of networked computer servers for managing data can be capital-intensive. According to Dgtl Infra, you may need about $7 million to $12 million per megawatt to build one. But with tax benefits, you can reduce costs significantly and maximize ROI.
And this is what the US, in general, offers. Remember, data centers have their own share of benefits. From providing high-paying jobs to improving the overall outlook of the economy, these facilities can really help governments advance. Realizing that, state governments have been competing fiercely in various ways, including offering tax incentives, to welcome these facilities.
Texas offers $1 billion in sales tax exemptions in 2025, including for energy consumption. This is much more than what competing states like Virginia offer. These tax incentives reduce operational costs, explaining why large-scale investors are eyeing Texas regions like Dallas.
Given all these factors, it’s no wonder that data center investors are flocking to Dallas. The city’s prime location, away from hurricane-prone areas, offers a reliable option for businesses looking for stability and longevity. Plus, its central position as a premier data hub allows for low-latency connections, making it an attractive choice for national companies.
