Two of the strongly emerging sectors of northern Nevada's economy data centers and Internet fulfillment centers each took another step forward last week.
Rubicon Data Centers plans to build a 20-megawatt data center housed in a 300,000-square-foot facility to be constructed at Tahoe Reno Industrial Center. The project is part of a larger master-planned campus on 44 acres to be developed by Prologis for Rubicon.
Meanwhile, BizChair, an Internet retailer of office furniture, said it's opening a distribution center in a 292.500-square-foot building in Stead, primarily to serve West Coast customers.
Rubicon says building a data center in northern Nevada makes sense for a number of reasons.
JP Balajadia, who heads the newly formed San Francisco-based company with partner Kevin Louie, says northern Nevada's low cost of business versus major markets, its cool, dry air and proximity to California customers make it a good place to house a mid-sized data center targeted for small- to medium-sized businesses.
Rubicon Data Centers hopes to break ground on the project by early 2013, but it's currently negotiating with potential customers primarily in the Bay Area about their data center requirements.
"We are trying to have this site marry up with some of those requirements," Balajadia says. "We have been designing and building data centers for more than 15 years. We definitely have one size that fits the biggest swath of requirements. After tilting up a concrete shell and getting infrastructure delivered, we are hoping that in six to eight months we have customers rolling in live racks of gear."
Data centers are typically located in major U.S. markets such as the San Francisco Bay Area, Los Angeles, or New York and northern New Jersey, Balajadia says areas with high costs for power, land and living. Companies housed at data centers in these locations pay more for hosting services than they would in northern Nevada, where land and power are much less expensive.
Adds Louie: "Total cost of occupancy has become increasingly more important. Our data center in Reno will offer a very low total cost of occupancy, when factoring not just rent, but power, taxes, operating expenses and labor."
Rubicon is targeting a wide range of companies as potential data-hosting clients, including banks, gaming customers, hospitals, social networking companies and small retailers. The company in essence functions as a high-tech property manager. Rubicon would provide a secure site with low-cost power, access to fiber optic cabling, continuous security and a 24-hour operating staff to ensure companies' back-of-house operations are constantly up and running.
Targeting smaller firms makes sense, Balajadia notes, because the many major players in the data center industry are slugging it out for the business of medium- to large-sized companies.
"If we can establish ourselves in an area we have identified as a good alternative to the Bay Area and be first to market, we can capture the bulk of those types of requirements," Balajadia says.
Projected employment includes a small property management group of two to five individuals; about 10 to 15 people to service the servers and other hardware; a security force of 10 to 15 employees; and eight to 12 engineers to ensure continued back-of-house operations. Rubicon will try to hire as many people locally as possible, Balajadia says.
"The Reno area does have an educated workforce and people who know mission-critical work," he says.
BizChair, headquartered in Canton, Ga., will make its first foray out of Georgia with the distribution center in the Panattoni Lear Industrial Center at 6650 Echo Ave. The company, which posted 2010 sales of $58 million, is led by Sean Belnick. He launched the company in 2001 as a 14-year-old working out of his bedroom. It's among the first online-only retailers of office furniture.
The company expects to employ eight to 10 at the distribution center, although initial employment could top 20 as it hires temporary workers to stock the warehouse.
Gary Glazer, president of BizChair, said the company ruled out a California location for the distribution center because of high costs and difficult employment laws.
It chose Reno over Las Vegas, he said, because of the costs of bringing inbound containers from Asia are several hundred dollars less in Reno.
He noted, too, warehouse lease rates are attractive in Reno, labor supplies are ample, and the company can get orders to its customers in California within one or two days.
Gov. Brian Sandoval, who made a pitch to BizChair executives about the value of a Nevada location, noted that the company is experiencing significant growth in the fast-developing eRetail sector.
Tom Miller of Miller Industrial Properties represented BizChair as well as the landlord in the company's lease negotiations.
