Data Centers in Sioux Falls
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Sioux Falls – Low-Risk, High-Value Colocation
Sioux Falls is a compelling market for organizations prioritizing operational resilience and cost efficiency over ultra-low latency to major coastal hubs. Its extremely low natural disaster risk and significant tax incentives make it an ideal location for disaster recovery sites, secondary workloads, and long-term data archiving. This market delivers stable, predictable performance for businesses looking to optimize IT infrastructure budgets.
Sioux Falls: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, though fewer long-haul fiber routes than primary markets. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest hubs include Minneapolis and Omaha; private network extensions are available. |
| Power Cost | $0.23/kWh, as of Midyear 2025 | Grid is supplied by a high percentage of renewable sources, primarily wind. |
| Disaster Risk | Low (14.92 NRI Score), as of September 2025 | Ranks among the safest locations in the US from natural disasters. |
| Tax Incentives | Yes | Multiple DC-specific sales and property tax exemptions and abatements are available. |
| Sales Tax | 4.25%, as of Midyear 2025 | State-level rate applies; local taxes should be verified. |
Network & Connectivity Ecosystem
Sioux Falls provides a reliable, though not densely populated, connectivity environment suited for enterprise and disaster recovery needs.
Carrier Density & Carrier Neutrality: The market contains 4 data center providers, as of September 2025. While carrier density is lower than in major hubs, the available facilities offer carrier-neutral access, providing sufficient options for redundant connections from regional and national networks.
Direct Cloud On-Ramps: There are no direct, in-market public cloud on-ramps, as of September 2025. Businesses connect to hyperscale clouds via private network links to major hubs like Minneapolis or Omaha, enabling secure, low-latency access to cloud services.
Internet Exchange Points (IXPs): Public peering is limited within Sioux Falls. Most network peering is conducted privately between carriers or routed through larger regional exchange points in Minneapolis or Kansas City to optimize traffic flow.
Bare Metal: Bare metal server options are available, primarily through global providers with a presence in the region. Services from providers like Hivelocity can be deployed to serve workloads from Sioux Falls data centers.
Power Analysis
Average Cost Of Power: Industrial power is priced at approximately $0.23/kWh, as of Midyear 2025. This rate reflects a stable and increasingly renewable power grid, offering predictable energy costs for long-term planning. South Dakota's energy mix is dominated by wind and hydroelectric power.
Power Grid Reliability: The regional power grid is well-engineered and reliable, with modern infrastructure supporting the area's data centers. Facilities are typically fed by redundant power substations, ensuring high levels of uptime for mission-critical operations.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers in Sioux Falls are positioned to serve the city's strong financial services, healthcare, and agricultural technology sectors. This proximity allows local enterprises to implement low-latency hybrid IT architectures.
Regional Market Reach: As a hub in the Upper Midwest, Sioux Falls effectively serves businesses across South Dakota, North Dakota, Nebraska, Iowa, and Minnesota. It provides a strategic location for content delivery and application hosting for this multi-state region.
Tax Advantage For Data Centers: South Dakota offers some of the most aggressive tax incentives for data centers in the nation. Programs include certification-based exemptions and abatements on both sales and property taxes for equipment, which can drastically lower the capital investment required to build or expand a facility.
Natural Disaster Risk
Sioux Falls has a very low natural disaster risk profile, with a FEMA National Risk Index score of 14.92, as of September 2025. The location is effectively isolated from catastrophic events like earthquakes, hurricanes, and wildfires that affect other regions.
The primary environmental risks are manageable, weather-related events common to the Upper Midwest. These include winter weather, ice storms, strong wind, and riverine flooding. Data center facilities in the area are engineered to mitigate these specific threats.
