Digital Realty Scales Back Investment Plans in Dallas
A data center owner and operator is scaling back on plans to invest in its Dallas digs.
Digital Realty, which was founded in San Francisco and is currently headquartered in Austin, is asking to modify an agreement it initially struck with the Dallas City Council in 2021.
A memo issued by the city revealed that the firm no longer plans to move forward with $104 million in capital improvements, nearly 85% of which would have been used to expand its data center capabilities at its 2323 Bryan St. location downtown.
Instead, the company says it made a more modest $13 million renovation to the property.
Background Information
The memo cited “unforeseen circumstances and technical challenges” as the reason behind the investment pullback. The Dallas Morning News reached out to Digital Realty but did not receive a response before publication.
Last year, Digital Realty secured two similar economic development agreements from Garland for two 15- and 45-acre data centers in the city, totaling more than $1 billion in investments.
Incentives for Digital Realty
To incentivize Digital Realty’s investment in its downtown property, Dallas agreed to a 50% business personal property tax abatement, which applies to equipment, furniture and machinery on a property, but not the land or building itself.
Dallas also authorized an economic development grant of $1,000 for every permanent, full-time job created by Digital Realty by Dec. 31, 2025, up to a maximum $200,000.
The company also received a $2 million Texas Enterprise Fund grant from the state for the planned improvements.
Modified Agreement
To maintain Digital Realty’s eligibility for the TEF grant, the city of Dallas is recommending reducing its required capital investment from $104 million to $13 million — the amount of the already-completed renovation.
In turn, the city also recommends eliminating the business personal property tax abatement.
It also asked to increase the required number of full-time jobs with a minimum average annual salary requirement of $120,000 from 143 to 175, and lower the job grant to $290 per job, capped at $50,000.
Job Creation and Local Hiring
The city noted “While the job creation requirement deadline is not until the end of this year, to-date Digital has created or retained 143 jobs on site with an average salary that exceeds the required minimum salary of $120,000.”
A local hiring threshold set by the initial agreement may also be reduced from 35% to 25% Dallas residents, with hybrid positions based at the Bryan Street location now counting toward that total.
Conclusion
In conclusion, Digital Realty is scaling back its investment plans in Dallas due to unforeseen circumstances and technical challenges. The company has already completed a $13 million renovation and is asking to modify its agreement with the city to reduce its required capital investment and eliminate the business personal property tax abatement. The city is recommending changes to the agreement, including increasing the required number of full-time jobs and lowering the job grant.
FAQs
Q: What is Digital Realty, and what does it do?
A: Digital Realty is a data center owner and operator that provides data center solutions to businesses.
Q: Why is Digital Realty scaling back its investment plans in Dallas?
A: The company is scaling back its investment plans due to unforeseen circumstances and technical challenges.
Q: What changes is the city of Dallas recommending to the agreement?
A: The city is recommending reducing the required capital investment from $104 million to $13 million, eliminating the business personal property tax abatement, increasing the required number of full-time jobs, and lowering the job grant.
Q: How many jobs has Digital Realty created or retained at its Dallas location?
A: The company has created or retained 143 jobs on site with an average salary that exceeds the required minimum salary of $120,000.
