Most people are enticed by the bright lights and glamour of a big city. This is especially true in New York City—one of the greatest cities in the world! So much is going on in the Big Apple; bustling foot traffic, people frantically going to and from work, various forms of entertainment, tourist attractions, fine dining, and a whole lot more. The city is where all the action is, but it’s not necessarily the best place for your company to colocate.
Allow me to explain by sharing with you the leading reasons why you should consider colocating your business in Newark, NJ, rather than New York, NY.
As we just covered, New York City has a lot going on. For that reason, it’s not necessarily the most secure place to house your data. Sure, data centers located in New York have top-tier security protocols, just like any reputable data center, but they are at a higher risk for being targeted than those located in less populated areas.
Data centers on the periphery of major cities, such as those on the outskirts of Manhattan in Newark, NJ, are less likely to be subject to major terror attacks, because they have a much smaller population and fewer significant landmarks. It’s common knowledge that crime rates in major cities tend to be higher than those in nonmetropolitan areas.
Security concerns stretch beyond manmade criminal activity. In terms of natural disasters, it’s also important to consider the geography and history of the location you are looking to house your data in. Port cities such as New York are more prone to hurricanes, whereas cities located on or near a fault line are subject to earthquakes, which can have disastrous implications for any structure housing your precious data. Unlike New York, Newark is outside the 100- and 500-year flood plains, making for a much smaller risk of flood damage to a data center in the area. Knowing the strong likelihood that natural disasters will occur, wouldn’t you want to move your colocation services from an at-risk NYC provider to a “safer” area at lower risk for natural disaster? We all remember how hard Hurricane Sandy hit New York City’s telecommunications infrastructure just a few years ago.
Cost of Power
Brownouts and blackouts have always been a major issue for business operations, but as society becomes more reliant on technology (and the infrastructure that allows businesses to operate), loss of power has far more-disastrous implications than it has over the past few decades. Data centers require an enormous amount of power; failures can cause unexpected downtime, leading to angry customers and a loss of profit. Businesses need affordable, reliable power from their colocation provider.
Companies colocating in data centers that are geographically located outside a large city like New York may find that they can save a large amount of money on power. For example, the cost of electricity in the areas that surround New York City is typically 30–50 percent lower than in the Big Apple.
New Jersey data centers are on a power grid separate from that of New York City, offering an appealing failover or disaster-recovery location. During and in the aftermath of 2012’s Hurricane Sandy, while several data centers in New York were struggling with water damage and utility outages, the situation was much better in New Jersey: many facilities switched to generator power but remained online. Along with ideal location and optimal power prices across the state as compared with metro NYC, New Jersey data centers ensure high availability for mission-critical IT systems.
Cost of Doing Business
Similar to the cost of power, the overall cost of doing business in areas surrounding a city is generally lower than the cost of doing business in a city.
New Jersey offers a viable alternative for businesses looking to colocate on the outskirts of New York City. Newark is approximately 13 miles from Manhattan and offers a general tax rate of 3.309%, while New York City has a tax rate of between 4.425% and 9.00%, depending on the business segment. In addition, getting the required permits from the New York City government can be difficult for anyone looking to build/expand a data center. The 165 Halsey Street team has had very little trouble getting the required documentation for any of our expansion efforts when dealing with the City of Newark. New Jersey is home to several Fortune 500 companies specializing in life science, health care, aerospace, manufacturing, IT and more. As a growing technology hub, New Jersey nicely accommodates businesses with a rich portfolio of tax incentives, making it a preferred state for business expansion, relocation or inauguration.
According to a recent report by commercial-real-estate firm CBRE, desire for capacity in primary U.S. data center markets continues, with financial-services, health-care, social-media and other tech companies driving heavy demand.
Because of the growing economy and high demand, companies looking to colocate will have the advantage of a wide array of data center facilities to choose from, as well as highly competitive pricing.
Reduced Latency to NYSE Euronext Facility
Given the difference in route length between Newark-Mahwah (29.3 miles) and New York City–Mahwah (33.1 miles), a facility located in Newark would have a significant latency advantage over a facility located in New York City when sending/receiving information to the NYSE Euronext facility in Mahwah, NJ.
Improved latency is a plus for most industries, but for financial firms attempting to gain a leg up on competitors, it could mean a difference of hundreds of millions of dollars in profit. And that’s more than enough reason to consider a Newark, NJ, colocation facility over a New York City–based one.
Data centers located outside of major cities are far more accessible to their tenants, usually offering ample parking and less traffic when traveling to and from a facility. The farther your business is from its data center, the greater the networking costs. For quick disaster recovery, a company's colocation provider/data center should ideally reside no more than 50 to 100 miles from the primary data center.
Although Newark is a “city,” it doesn’t have nearly the traffic issues that New York City suffers. Data centers located in Newark are easily accessible via highway, while getting to a facility located in the heart of Manhattan may involve sitting in hours of bumper-to-bumper traffic. Additionally, the state is easily accessible via world-class seaports and airports.
Some would argue that the most accessible data centers are those located in rural areas, where there is likely very little traffic to deal with. Although rural areas are attractive owing to low cost and high availability of land for extensive complexes, they often require more-expensive networking for business located far away from their rural facility. The higher land costs for convenient facilities located just outside of major metropolitan areas, relative to the cost of the data center itself, are insignificant. Moreover, urban areas generally have better telecommunications and power infrastructure in place, increasing efficiency.
In summary, colocating in Newark, NJ (just 13 miles outside of Manhattan), has many benefits, making it a more appealing option than colocating in New York City. Newark facilities can provide more-secure and more-accessible colocation services that can benefit your bottom line in both cost of power and cost of doing business.
Location is paramount when determining where to colocate your data; be sure that you’re giving your business the best chance at success and consider all of the above when shopping for a colocation provider.
About the Author
Joseph Simone is President at Tishman Real Estate Services for 165 Halsey Street.