Data Centers in Sioux Falls
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Sioux Falls – Secure, Stable, and Cost-Effective Colocation
Executive Summary
Sioux Falls is a strategic market for organizations prioritizing operational resilience and low total cost of ownership. The region's exceptionally low natural disaster risk, favorable tax incentives, and access to renewable energy create a compelling business case for production and disaster recovery workloads. It is an ideal location for businesses that require high uptime without the premium costs of coastal hubs.
Sioux Falls: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, limited direct international routes. |
| Direct Cloud On-Ramps | 0 — as of September 2025 | Access is via private extension from hubs like Minneapolis or Omaha. |
| Power Cost | $0.23/kWh, as of September 2025 | Predominantly from renewable sources, mainly wind and hydro power. |
| Disaster Risk | Low (FEMA NRI Score: 14.92) | One of the lowest-risk metros in the United States. |
| Tax Incentives | Yes | Multiple DC-specific sales, use, and property tax exemptions are available. |
| Sales Tax | 4.25% — South Dakota, as of September 2025 | State-level sales tax; specific exemptions apply to qualified data centers. |
Network & Connectivity Ecosystem
Sioux Falls provides a reliable connectivity ecosystem for serving the Upper Midwest. While not a primary interconnection hub, it offers a stable and cost-effective network environment.
Carrier Density & Carrier Neutrality With 4 data center providers, the market offers access to over 4 unique network carriers, as of September 2025. Facilities typically provide carrier-neutral interconnection, ensuring competitive and resilient connectivity options from regional and national providers.
Direct Cloud On-Ramps There are no direct, in-market cloud on-ramps from major providers, as of September 2025. Secure, private connections to AWS, Google Cloud (GCP), and Microsoft Azure are established via dedicated network extensions to primary hubs in Minneapolis or Omaha.
Internet Exchange Points (IXPs) Public peering is limited within the immediate market. Most network peering is conducted privately between carriers or through regional exchanges in nearby major metropolitan areas, ensuring efficient traffic exchange.
Bare Metal Bare metal server options are available in the region, providing dedicated, high-performance computing resources. Providers such as ColoCrossing offer solutions suitable for compute-intensive applications that require direct hardware access.
Power Analysis
Sioux Falls offers a reliable power infrastructure supported by a high concentration of renewable energy sources, primarily wind and hydroelectric.
Average Cost Of Power Industrial power is priced at approximately $0.23/kWh, as of September 2025. While not the lowest in the nation, this cost supports a stable and increasingly green power grid, contributing to sustainability goals.
Power Grid Reliability The regional power grid is well-engineered and reliable. The very low risk of significant natural disasters like earthquakes or hurricanes contributes to exceptionally high grid stability, which is a critical factor for data center uptime.
Market Access, Business & Tax Climate
The business environment in Sioux Falls is defined by strong local industry, strategic regional access, and some of the most aggressive data center tax incentives in the country.
Proximity To Key Business Districts Data centers in Sioux Falls serve the region's primary industries, including finance, healthcare, and agriculture technology. This proximity allows local enterprises to implement low-latency hybrid IT architectures.
Regional Market Reach From Sioux Falls, organizations can effectively serve a broad geography encompassing South Dakota, North Dakota, Iowa, Nebraska, and Minnesota. It is a logical hub for content delivery and application hosting for the Upper Midwest.
Tax Advantage For Data Centers South Dakota offers substantial, long-term tax incentives specifically for data centers. Qualified projects can receive exemptions on sales, use, and property taxes on equipment for decades, significantly reducing capital and operational expenditures.
Natural Disaster Risk
Sioux Falls has a very low natural disaster risk profile, with a FEMA National Risk Index score of 14.92 out of 100, as of September 2025. This makes it one of the safest locations in the United States for critical infrastructure. The primary environmental risks are manageable and mainly related to weather.
Key risks include:
- Winter Weather & Ice Storms
- Strong Wind
- Hail
- Drought
- Riverine Flooding
- Heat & Cold Waves
