Manufacturing, I.T. and supply chain companies keeping a close eye on their budget should be pleased to learn electric rates in Greater Richmond are well below state, Mid-Atlantic, and national averages.

Companies large and small could benefit from relocating to the region. According to the Edison Electric Institute, the typical industrial rate is 5.4 cents per kilowatt-hour for a company using 1,000 kilowatts and consuming 650,000 kilowatt-hours per month in Richmond as of July 2019. When compared to typical rates of 6.7 and 8.8 cents per kilowatt hour offered by Southeast utilities and the national average respectively, this is an advantageous price for advanced manufacturing, supply chain, and I.T. companies.

A major reason why Greater Richmond electric prices are lower than other regions is because of both generation and delivery. According to the EIA, there are several factors that go into being able to produce and deliver electricity, such as:

  • Reliable transmission and distribution systems. Maintenance and repair costs to these systems can increase overall electricity prices.
  • Multiple, accessible power plants in the region. Richmond is geographically close to many of Dominion Energy’s power plant, such as two nuclear power stations, and other generation sources, such as solar facilities.
  • Access to sufficient water, wind and daylight. These resources can lower electricity costs with harvestable energy from hydro plants and solar panels.
    • Dominion Energy publicly committed to have 3,000 megawatts of solar and wind energy “in operation or under development” by 2022. That’s enough to power 750,000 homes with clean, renewable energy.
    • According to the Solar Energy Industries Association, solar electricity prices in Virginia have fallen 34 percent in the past five years, and the state is ranked 7th for projected growth in the next five years.
    • Dominion Energy’s pilot offshore wind project began construction in July 2019 and will consist of two 6-megawatt turbines. Located off the coast of Virginia Beach, it’s the first offshore wind project in U.S. Federal waters.

Any company looking to relocate should consider a region that provides the lowest electric prices. Greater Richmond, Va., is a great option for any company on the East Coast, as its statistically low industrial electric bills shine when compared to its competitors.

Tax rates for data centers are dropping in Greater Richmond, enhancing its value as a haven for information technology companies planning to establish new facilities.

Greater Richmond is already a prime location for firms with IT demands due to various incentive programs, highspeed transcontinental Internet cables and the Richmond NAP, which will additionally boost Internet speeds to new heights.

But the number of IT firms in the region can be expected to increase with decreased tax rates:

  • Chesterfield County recently reduced its data center tax rates by 86.6%. Taxes dropped from $1.80 per $100 to $0.24 per $100, making it the lowest data center tax rate in the state. Existing and future data centers in Chesterfield will see the new business property tax rate in July 2019.
  • Henrico County reduced its tax rate on data centers in 2017. Those operating in Henrico saw an 88.6% decrease on computer and related equipment tax rates, decreasing the rate from $3.50 to $0.40 per $100.

Richmond, Va., was ranked 3rd Best City (Outside Silicon Valley) For Your Next Startup by BroadBandNow in 2019 based on Internet speed, startup culture, and cost of living. The overall state of Virginia was also ranked as a top 10 “Most Innovative State” by WalletHub. The ranking is determined by a state’s human capital and innovation environment, partly based on the share of technology companies.

In Greater Richmond alone, there are over 2,400 information technology firms operating data centers—including Capital One, Facebook, Bank of America, Quality Technological Services (QTS) and Flexential. Richmond tech firms employ more than 21,300 employees throughout Greater Richmond.

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Clint Heiden, Chief Revenue Officer of QTS Realty Trust, Inc., discussed the Richmond area Network Access Point (NAP) — where data center, subsea fiber and terrestrial networks converge — as a factor in drawing large technology and Internet companies to Greater Richmond.

QTS, a leading provider of data center solutions, along with Telxius, a telecom infrastructure provider responsible for subsea Internet cables MAREA and BRUSA, created the new Richmond NAP. The NAP allows customers to complete high-speed international networking without having to collocate in or connect through the Ashburn, Va., mega center.

“The subsea cables that terminate in Richmond have opened an amazing opportunity for Henrico County to become a LOCUS for both domestic and international applications. That gives good reason for the creation of the QTS Richmond NAP, a place where multiple providers and Internet services can meet, connect and reach the international cables that link Virginia to other parts of the world.” – Vint Cerf, Chief Evangelist for Google, also known as one of the co-inventers of the Internet.

The Richmond NAP will offer the fastest, lowest-latency connectivity in North America from the U.S. to Southern Europe, Latin and South America.

Heiden responded to several questions on the Richmond NAP and why the world’s largest technology and Internet companies are coming to Henrico County:

Q. Why is it an opportune time for infrastructure investment?

A. The confluence of the MAREA/BRUSA next-generation subsea cables and the QTS Richmond NAP are establishing Richmond as the premier North American global interconnection hub. There have been some significant investments in Henrico recently. In just two years since the cable landing deployment, Henrico County accounted for 53% of announced statewide investments in Data Processing and Hosting, compared to just 6% during the nine-year period from 2008 to 2016, according to Mangum Economics for the Northern Va. Technology Council in 2018.

It’s amazing when you consider the technology and business influence global leaders have. Their interest validates the importance of the subsea cables terminating in Henrico County and the business ecosystems that are being created. In addition to the obvious value to Henrico, this new NAP is important to the growth of the Internet and its data flow allowing for a bypass of Ashburn, which is becoming congested and overly expensive.

Q. What are the forces driving the Richmond NAP?

A. If you think your business is not a data business, then you are late to the game. Just think about banking: if I can’t bank online I’ll switch to another bank. Likewise, if you don’t understand that once on the Internet your business is global, then you’re missing growth opportunities and not thinking big enough. The NAP addresses both of these issues. In addition, new applications and services are generating staggering increases in data production that are fueling dramatic growth in demand for local, regional, national and global connectivity that rely on subsea cables as the cornerstone for global interconnection and transmission.

Richmond is an ideal geographic location for North American continental access of subsea cables and all forms of interconnection mentioned previously. The QTS Richmond NAP is one of the world’s largest carrier-neutral data centers as well as a business-friendly environment. Facebook has begun their multi-billion investment adjacent to the Richmond NAP, along with Bank of America and Kinsale Insurance who are expanding their operations in Henrico County. These are just three of many enterprises making major investments in data-driven infrastructure in the region. The region is also creating a business ecosystem for entrepreneurial firms and is becoming an area of incubation for startups led by students coming out of leading surrounding state universities.

Q. What are the technological advancements making the QTS Richmond NAP a reality?

A. Good question and it’s about more than just technology. Henrico County has been at the forefront of attracting investment from network and data center providers due to a combination of business-friendly policies, attractive land for development, scalable power and a highly educated workforce in the county and surrounding areas. As a result, the area has a rich tapestry of existing fiber networks, Internet exchanges, SDN networks and data centers serving thousands of customers.

In just the last two years you have the arrival of both the MAREA and BRUSA subsea cables, along with the Facebook investment. These are transformative events that have opened the European, Latin and South American markets to the region via the lowest latency and highest capacity ever deployed between the continents.

Then when you consider the performance enabled by these subsea cables, it all becomes clear. MAREA and BRUSA are the highest capacity, lowest latency subsea cable systems ever built. MAREA is a Telxius joint project with Facebook and Microsoft. Innovations in optical transmission are enabling staggering increases in capacity. MAREA has reached 200 terabits per second (Tbps) of ultrahigh transmission capacity and is the highest capacity subsea cable system across the Atlantic connecting the US and Southern Europe.

BRUSA is a private cable built by Telxius and offers one of the lowest latency communication links between the U.S. and Brazil. Together, these cables provide state-of-the-art connectivity to enable the development of next generation cloud services and content distribution to and from Latin America and European markets.

To put this next-generation capacity and speed into perspective, 200 terabits per second is the equivalent of being able to download 12,000 HD movies per second, or every movie ever made in 42 seconds! This compares with cable systems developed as recently as 2013 that only delivered 9 Tbps.

Another major advancement is innovation in optical transmission that is enabling a new interconnection model where subsea cables can now terminate directly inside a multi-tenant data center rather than the traditional cable landing station (CLS) typically near a beach with limited interconnect options. Today’s data-intensive applications are driving demand for capacity and performance that is better served by terminating subsea cables directly in a connectivity-rich NAP as close as possible to the CLS.

Also in the works are numerous additional subsea cable terminations in the Richmond NAP that will connect the continents of Africa, the Middle East and Asia, as well as a second path to Europe.

Q. Why did Telxius choose Richmond and QTS for the cable terminations?

A. Because of its speed and proximity to the rest of the US, Richmond is the best access point into North America — more so than older cable landings in Florida, New York and New Jersey. QTS’ Richmond data center is one of the world’s largest and features in-building access to a wide array of on-net carriers including multiple fiber routes, third-party neutral Internet peering exchanges, and direct access to the world’s largest cloud platforms.

The Richmond NAP provides unmatched speed and savings for enterprises and hyperscalers that no longer must route their content through exchanges in Northern Virginia. Traffic can now be routed to major metropolitan areas like Philadelphia, Atlanta, Pittsburgh, Charlotte, Cleveland and many more areas faster and cheaper than relying on Northern Virginia. Facebook, Amazon, Microsoft and Google have established, or are in the process of establishing, a presence in the region to take advantage of the new opportunity.

Q. How important are the cables to the global economy?

A. The Internet and its growth, such as the new QTS Richmond NAP, means every company is global and as such has access to new customers, technologies and even employees. Just a few years ago you rarely heard talk about subsea cables when you were talking about data center infrastructure. Today, virtually every data center is making interconnection with subsea cables a priority to support data-driven global business. And it’s reflected in the international capacity deployed by the big content, cloud and hyperscale companies increasing 14-fold between 2012 to 2016, according to TeleGeography. They recognize the need to be where the subsea cables terminate to get the direct, many-to-many global connectivity that enables them to provide their customers with private and proximate connections to the Internet ecosystems that grow around it.

Every global business is now required to collaborate with partners instantly, across oceans, and meet user expectations for high-performance connectivity anytime, anywhere. This is not possible with conventional IT architectures where data is transmitted via lower latency networks and across distant, centralized corporate data centers. Subsea cables are the only option for extending businesses globally.

The global economy is quickly taking shape and every business is considering new growth strategies. Those that eliminate geographic boundaries and allow for the elegant movement of data across new paths such as MAREA and BRUSA to access new markets will be successful. Those that do not will be left behind.

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Companies with shared corporate services have seen many benefits from locating in the Richmond, Virginia, Region. The region’s middle-market quality of life and affordability are two outstanding reasons for employers to relocate operations from more expensive metropolitan areas.

Middle Office and Shared Service operations

Last year, the Greater Richmond Partnership commissioned the Wadley Donovan Gutshaw Consulting Group, one of the nation’s top site location consultant companies, to complete an analysis on how Greater Richmond stacked up against peer competitors for the suitability of a ‘middle office’ operation. The data showed that the Richmond Region bested its East Coast competitors, including Charlotte, N.C.; Columbus, Ohio; Jacksonville, Fla.; and Nashville, Tenn.

Several companies decide to escape the high real estate cost of the nation’s capital by locating a shared services office two hours south in Greater Richmond:

  • Capital One operates its corporate campus in the region, with 11,000 local employees
  • CoStar’s research division was moved to the area, ramping up to 600 employees in less than 12 months
  • ICMA-RC opened a backup headquarters location in the city’s downtown

Download the Middle Office Whitepaper

Research & Development

Research and Development (R&D) centers are popular in the area:

  • WestRock testing its newest packaging equipment at a local research and development facility
  • Hamilton Beach teams of engineers, designers, and consumer research and marketing specialists
  • The Altria Center for Research and Technology anchors the Virginia Bio+Tech Park

From a consumer perspective, the Richmond Region serves as a popular test market. Since the region’s demographics and personal perspectives fairly represents American consumers as a whole, several food chains and technology companies have chosen the region for soft roll-outs prior to national launches. Capital One recently introduced its new café concept in the Richmond market.

Data Centers

Several companies have located data centers in the region, including Capital One, QTS, Peak10 and Bank of America.

However, with the installation of the MAREA and BRUSA subsea cable systems, the region’s becoming an even more desirable location. The eastern half of the region has quick access to the connection point in Virginia Beach before the cable reaches Europe and South America.

Facebook is the latest to take advantage of the region’s new connection points. The company is constructing three new 500,000 square-foot buildings with a planned total square footage to over 2.4 million square feet. The multi-billion-dollar project will run solely on renewable energy.

Call center operations

Richmond is a magnet for client engagement centers due to the congenial and available workforce.

Owens & Minor, Elephant Auto Insurance, Teleperformance, Minacs and LendUp have all opened customer management centers in the area recently. Dominion Energy and Wells Fargo have also operated long-standing call centers with continued workforce recruitment success.

Learn more about the region's advantages for corporate services

New Trans-Atlantic cables result in new data centers in Richmond, Va., region

Facebook’s recent announcement of a two-phase $1.5 billion data center project in the Richmond Region can attributed to a major factor: extremely high-speed intercontinental fiber lines.

The Richmond Region offers one of the best location values for data centers in the Mid-Atlantic. The region offers pre-certified, secure sites, reliable fiber and redundant power paired with moderate costs and a business-friendly operating environment. Companies such as Peak10, QTS, Capital One and Bank of America all operate data centers in the Richmond, Va., region.

Facebook partnered with Telxius and Microsoft to build MAREA, the transatlantic submarine cable with the highest capacity to date. The MAREA cable operates at 160 terabytes per second (Tbps) to transport large amounts of traffic, as well as to handle other market needs such as virtual reality, IoT, and artificial intelligence. In layman’s terms, the cable allows speeds more than 16 million times faster than the average home internet connection, with the capability to stream 71 million high-definition videos simultaneously.

The BRUSA cable, exclusively owned by Telxius, connects San Juan, Puerto Rico, and Rio De Janeiro and Fortaleza, Brazil. It will be the highest capacity transatlantic subsea cable to ever connect the Americas to date — up to 138 Tbps.

“More and more content is being consumed, which requires a great deal of bandwidth, which is why the whole world needs to be connected to an infrastructure capable of transporting large volumes of data,” said Rafael Arranz, COO of Telxius.

The MAREA and BRUSA subsea cables port in Virginia Beach before traveling inland to one of the densest concentrations of data centers in the world — the Washington, D.C., area. One of MAREA’s main characteristics is its Mid-Atlantic location, much farther south than other transatlantic cables, thus diversifying connectivity through the Atlantic. In addition, the MAREA’s landing stations in both Sopelana (Spain) and Virginia (U.S.) are two key connectivity points with the United States, Africa, the Middle East and Asia.

However, after landing in Virginia Beach, the cables’ route first runs directly through the Richmond, Virginia, region with a much lower cost of doing business compared to the Northern Virginia area. In fact, Henrico County recently reduced its data center tax to a state-low 40 cents per hundred dollars to lure projects to the area.

Local utility provider Dominion Energy designed a renewable power tariff with Facebook for to develop solar power facilities to serve the 2.4 million-square-foot data center. Dominion will spend $250 million for the solar farm that would generate an estimated 300 megawatts of electricity.

Joining the MAREA and BRUSA connections in the future are three more fiberoptic lines:

  • The Google-dedicated cable, expected to become available in late 2020, will connect Virginia Beach with France.
  • The Midgardsormen, with a planned completion in 2019, will link Virginia Beach to Norway and Denmark.
  • The South Atlantic Express (SAEx) will connect the U.S. directly to South Africa via Fortaleza, Brazil, at 72 Tbps. The project’s second phase will connect South Africa to Singapore and India.

“Extending SAEx to the United States will boost access to the worldwide infrastructure, opening up traffic diversity to increase access and service reliability as demand from consumers and businesses alike grows rapidly,” said Dr. Rosalind Thomas, MD of SAEx International.

Greater Richmond, Va., was recently highlighted in Business Facilities’ “Cybersecurity Takes Center Stage” article featuring the business case for IT company expansions. This article comes on the heels of the magazine naming Virginia one of the states with the highest growth potential for cybersecurity.

Thomson Reuters
Gov. McAuliffe presents a Commonwealth of Virginia flag to Thomson Reuters VP of Strategy, Architecture & Operations Richard Puckett.

With 70% of the world’s Internet traffic passing through Virginia, it’s an obvious choice for firms to start their location search in Greater Richmond. The region is the capital of Virginia’s second-highest concentration of technology workers in the U.S. (Cyberstates, 2016).

The Commonwealth is ranked the 7th most innovative state by Forbes and more than 180,000 Virginians in the private sector currently work in IT. Soon joining them in the workforce are more than 28,000 students enrolled in IT programs, including local colleges University of Richmond and Virginia Commonwealth University, as well as colleges throughout the state like University of Virginia and Virginia Tech. Computer science graduation rates are increasing more than two times faster in Virginia than the U.S. average.

Comprised of the City of Richmond and counties of Chesterfield, Hanover and Henrico, the region’s cybersecurity community is anchored by GE in Henrico and Thomson Reuters in the City.

“Establishing a presence in Richmond provides us excellent access to talent and cyber-related resources from the nearby academic, research and military communities,” said Tim McKnight, Chief Information Security Officer of Thomson Reuters.

GE cited the ability to attract talent as a major selling point of locating in Virginia.

“We wanted to make sure we located in a place where we would never have concerns about our ability to attract the best talent,” said Larry Biagini, GE’s vice president for IT security and compliance. “So, Virginia was a relatively easy choice.”

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