Google Makes Nevada Land Grab for Data Center
Google Makes Nevada Land Grab for Data Center
Alphabet unit pays $29.1 million for 1,210 acres a few
miles south of Tesla’s battery ‘gigafactory’
By Jack Nicas in San Francisco and Jim Carlton in Reno,
Nev. April 17, 2017 8:00 a.m. ET
Tesla Inc.’s “gigafactory” has a big new neighbor:
Google.
Google last week bought land stretching across 1,210
acres at a private industrial park east of Reno, Nev., for $29.1 million,
according to people familiar with the deal and documents filed late Friday in
Storey County, Nev.
The Alphabet Inc. unit aims eventually to build a data
center at the 107,000-acre Tahoe Reno Industrial Center, according to these
people. Google, which made the deal through a subsidiary called Silver Slate
LLC—created in Delaware in August—has no immediate plans to build, according to
a person close to the company.
The vacant desert tract near Electric Avenue is several
miles south of the 3,200 acres where Tesla is building its $5 billion battery
factory, which could be the world’s biggest building at 10 million square feet
when it is completed in the next several years.
Once known for casinos and brothels, Reno is now
attracting corporations drawn by its low costs, lenient permitting rules and
relative proximity to Silicon Valley. Other big corporations that have recently
built data centers, factories and distribution centers at the industrial park
include Apple Inc., Wal-Mart Stores Inc. and eBay Inc.
Google is aggressively expanding its network of
computers—likely already the biggest in the world—to support its core internet
business and its push into selling computing power over the internet, known as
cloud computing.
The company believes its cloud business could one day
eclipse the advertising business that accounted for 88% of Alphabet’s $90
billion in sales last year. Google and cloud rivals Amazon.com Inc. and
Microsoft Corp. are collectively spending billions of dollars each year on data
centers, vast warehouses of computer servers.
A Google data center near Reno would likely leverage new
fiber-optic connections at the industrial park. Internet-infrastructure company
Switch LPD recently connected Silicon Valley, Los Angeles, Las Vegas and the
Tahoe Reno Industrial Center with high-speed cable that can deliver data around
the loop in less than 14 milliseconds, or thousandths of a second.
Some officials in Reno said rumors of Google’s expansion
there have swirled for two years. The deal was cloaked in secrecy, with some
officials saying they had been required to sign multiple nondisclosure
agreements. “The company that shall remain unnamed” is how one person referred
to Google when asked about it. Others around town have called the sale “the
megadeal.”
The industrial center has been a big draw. Its top
pitchman, Lance Gilman, is a cowboy-hatted real-estate broker and county
politician who also owns the World Famous Mustang Ranch—as it is labeled on
Google Maps—a legally licensed bordello near the edge of the park.
In 2014, Reno won a multicity competition to become home
to Tesla’s battery plant. A year later, Switch said it was spending $1 billion
to build the world’s largest data center at the park. Numerous deals like these
since 2011 have added more than 30,000 jobs in the metropolitan area, home to
about a half million people.
Google’s expanse of land is so large that it could easily
house more than just a data center, which has led to speculation among people
connected to the deal that it may eventually be used for driverless-car
research or operations. Some officials believe Alphabet will use the new land
for a track where it could test its self-driving cars at highway speeds. Speeds
on the public roads and a private track in Merced County, Calif., where
Alphabet now tests are limited to 35 miles an hour, a former employee said.
Nevada Gov. Brian Sandoval is sponsoring legislation that
would allow self-driving cars to operate as taxis. Alphabet, Ford Motor Co. and
Uber Technologies Inc. are among the companies backing the bill.
Auto and tech-industry analysts expect Alphabet to
eventually operate its self-driving cars as taxis, a service that would likely
require a depot for storing and servicing the vehicles—which could make owning
land in Nevada useful in the near future.
—Richard Teitelbaum contributed to this article.
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