Construction is underway on Microsoft Corp.’s Project Osmium at 5855 S.W. Kerry St. in West Des Moines. Photos by Duane Tinkey

Microsoft Corp., the Washington-based technology giant, plans to build two new data centers in West Des Moines potentially expanding the western suburb’s tax base by more than $500 million, the Business Record has learned.

The two data centers will be the fourth and fifth constructed in West Des Moines, where Microsoft has invested between $3 billion and $5 billion since 2010.  

“I think this speaks a lot to what they think of the economy here in Iowa, that this has been a really good place for them to expand and grow,” said Clyde Evans, West Des Moines’ community and economic development director. “It will help us complete some very major infrastructure projects and will open up additional areas within the community for future development.”

Microsoft, in an email, confirmed that it planned to build two new data centers in West Des Moines.

“Microsoft continues to expand our global and local infrastructure in response to growing demand and to support our customers’ digital transformation,” a Microsoft spokesperson wrote in an email. 

“When choosing data center sites, Microsoft considers customer demand for locally delivered services and takes into account over 35 weighted criteria including close proximity to customers, an ample and reliable power source and fiber optic networks, a large pool of skilled labor, and affordable energy rates to determine the long-term viability of each site,” the spokesperson wrote. 

In its annual report, filed in late July, the company said that it was increasing its focus on cloud-based services. To do that, “we are incurring costs to build and maintain infrastructure to support cloud computing services,” the company wrote in the annual report.

The report said that through 2023, Microsoft had more than $5 billion in construction commitments. 

The two new West Des Moines data centers – Project Ginger East and Project Ginger West – will each be about 1.8 million square feet and each cost about $1 billion to develop, which includes building construction materials and machinery and equipment, Evans said. The two data centers will be similar to Microsoft’s Project Alluvion data center at 550 S.E. White Crane Road, north of Iowa Highway 5, he said.

Construction on the two new data centers is expected to begin in September 2021, Evans said. 

West Des Moines officials began talking to Microsoft about the two projects in mid-2019, Evans said.

“We’ve had a fantastic working relationship with them,” he said. “We’ve been able to perform and more than meet their expectations.”

Project Ginger East will be located on about 130 acres south of Highway 5 and north of South County Line Road, kitty-corner from the Alluvion data center, Evans said.

Polk County real estate transaction records show that Microsoft paid West Lakes Properties LC $15.82 million for 131 acres of farm ground south of Highway 5 in a transaction that was recorded on Sept. 30. West Lakes Properties is managed by Knapp Properties, records show.

Project Ginger West will be built on about 180 acres south of Booneville Road, west of Johnson Creek and north of Raccoon River Drive, Evans said. 

Microsoft paid ERC Family Partnership LTD $3 million for 36.5 acres of farm ground in a transaction that was recorded on Sept.  29, Dallas County real estate records show. ERC Family Partnership and W&G McKinney West Farm LC own other ground in the area. 

Evans said the city will make infrastructure improvements for both Project Ginger East and West. Those improvements, which will include extending Grand Prairie Parkway south to the Ginger West site, will be paid for from tax increment finance funds generated by Microsoft’s property tax assessments. In addition to road improvements, water and sewer will also be extended to both sites.

The city is preparing a development agreement with Microsoft and also plans to create a new Urban Renewal Area that will include the Ginger West site, Evans said.

With past projects, Microsoft has received economic development grants from the state of Iowa to help pay for the installation of conduit that interconnects their data centers, Evans said. In the past, Microsoft has contracted with the city of West Des Moines to do the installation.

Also with other past projects in West Des Moines, Microsoft has not asked for 10 to 20 years of tax abatement rebates, a common request by owners of new development projects. Evans said he doesn’t expect Microsoft to make those requests with the new data centers.

“The impact of that track record has had a positive impact for the school districts and our community,” Evans said. 

Microsoft currently is constructing Project Osmium at 5855 S.W. Kerry St. in West Des Moines. Construction of the data center is expected to be completed in May 2022.

Microsoft’s first venture into West Des Moines was with Project Mountain, a data center first announced in 2008 and expanded in 2011 and 2013. Project Alluvion was announced in 2014.

Microsoft Corp. bought more than 130 acres south of Iowa Highway 5 in September for a new data center, code named Project Ginger East.

Microsoft Corp. plans on developing a data center between Booneville Road and Raccoon River Drive in West Des Moines. It has begun buying land for the development, whose code name is Project Ginger West.

Microsoft’s West Des Moines data centers

Project Mountain
First announced: 2008
Address: 8855 Grand Ave.
Microsoft’s initial investment:  $38 million
Minimum property tax assessment agreed to in development agreement: $48.2 million
How many square feet: 114,000 square feet 

Project Alluvion
First announced: 2014
Address: 555 S.E. White Crane Road
Microsoft’s initial investment:  About $1.2 billion
Minimum property tax assessment agreed to in development agreement:  $243.6 million
How many square feet: 1.16 million square feet 

Project Osmium
First announced: 2016
Address:  5855 S.W. Kerry St.
Microsoft initial investment:  $981.2 million
Minimum property tax assessment agreed to in development agreement:  $236.3 million
How many square feet: 1.7 million square feet

Source: City of West Des Moines