Data Centers in South Dakota
5 locations found
- SD
South Dakota Network Sioux Falls 2
5300 North La Mesa Drive, Sioux Falls
- T
Tierpoint SFW
5300 North La Mesa Drive, Sioux Falls
- SD
South Dakota Network Sioux Falls 1
2900 West 10th Street, Sioux Falls
- T
Tierpoint SFE
700 East 54th Street North, Sioux Falls
- GW
Golden West Telecommunications Rapid City
3850 Tower Road, Rapid City
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Explore Markets in South Dakota
South Dakota – Low-Risk, High-Incentive Colocation
Executive Summary
South Dakota is an excellent market for companies prioritizing operational stability, low disaster risk, and cost control for their infrastructure. Its combination of strong tax incentives and a low-risk natural environment makes it a prime location for disaster recovery, backup, and archival workloads. This state delivers a compelling financial case for businesses looking to secure data without the premium costs of primary coastal markets.
South Dakota: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | A secondary market with solid, reliable connectivity for most business applications. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Access is via network extension from hubs like Minneapolis or Denver. |
| Power Cost | $0.23/kWh – as of September 2025 | Industrial power costs are offset by a grid with a majority renewable mix. |
| Disaster Risk | Low (14.92 NRI Score) – as of September 2025 | One of the lowest natural disaster risk profiles in the United States. |
| Tax Incentives | Yes | Multiple data center-specific sales and property tax exemptions and abatements are available. |
| Sales Tax | 4.25% (state rate) – as of Midyear 2025 | Lower than many competing states, with exemptions available for qualified data centers. |
Network & Connectivity Ecosystem
South Dakota's connectivity is reliable and suited for its role as a secure, secondary data center market. While not a primary interconnection hub, it provides sufficient infrastructure for a wide range of applications.
Carrier Density & Carrier Neutrality The market has over 4 unique network carriers, as of September 2025. While not as dense as a major metro, the state offers carrier-neutral facilities, providing choice for resilient network design.
Direct Cloud On-Ramps There are no direct public cloud on-ramps within South Dakota, as of September 2025. Businesses connect to cloud providers via private network extensions (PNI or wave services) to major hubs like Minneapolis or Denver. This architecture is well-suited for backup, disaster recovery, and applications that are not extremely sensitive to latency.
Internet Exchange Points (IXPs) Public peering is limited within the state. Most network interconnection is handled through private peering arrangements inside data centers or is routed through major exchange points in nearby regional cities.
Bare Metal Bare metal server capacity is available in South Dakota. Providers like ColoCrossing offer dedicated server solutions for businesses that require direct hardware control without capital expenditure.
Power Analysis
South Dakota provides a stable and increasingly green power environment, making it a sustainable choice for long-term infrastructure deployments.
Average Cost Of Power The average industrial power cost is approximately $0.23/kWh, as of September 2025. The state's power mix is dominated by renewable sources, particularly wind and hydroelectric, which contributes to long-term cost stability and helps meet corporate sustainability goals.
Power Grid Reliability The power grid is well-engineered to support both its industrial and agricultural base across wide areas. This results in a reliable power infrastructure with redundancy built into key commercial zones.
Market Access, Business & Tax Climate
South Dakota offers a strong business case centered on low operational costs, strategic geographic positioning for disaster recovery, and some of the nation's most aggressive tax incentives for data centers.
Proximity To Key Business Districts Data centers are primarily located to serve the state's main economic hubs in Sioux Falls and Rapid City. These facilities support key local industries including finance, healthcare, and government services.
Regional Market Reach Geographically, South Dakota serves as an effective disaster recovery location for businesses in the Upper Midwest, including Minneapolis, Omaha, and Des Moines. Its central location provides a secure "safe zone" from the coastal and seismic risks affecting other regions.
Tax Advantage For Data Centers South Dakota offers exceptionally strong tax incentives for data center operators and tenants. Qualified projects can receive exemptions from sales and use tax for up to 35 years and property tax abatements on critical equipment, which significantly reduces the total cost of ownership.
Natural Disaster Risk
South Dakota has a very low natural disaster risk profile, with a FEMA National Risk Index Score of 14.92, as of September 2025. This makes it one of the safest locations in the nation for building and operating mission-critical infrastructure.
The primary environmental risks are manageable through standard facility engineering and operational planning. Key risks to consider include winter weather, strong wind, hail, and periods of drought. The state has no significant exposure to hurricanes, earthquakes, or coastal flooding.
