Data Centers in Sioux Falls
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Sioux Falls – Stable & Secure Colocation Hub
Sioux Falls is an excellent market for organizations prioritizing disaster recovery and operational stability. Its very low natural disaster risk profile and strong tax incentives provide a secure environment for critical infrastructure, directly protecting long-term investments and ensuring business continuity. This makes it a compelling choice for secondary or backup data center deployments serving the Upper Midwest.
Sioux Falls: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid regional connectivity, but lacks the density of a major national hub. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Access via private network extensions from providers in Minneapolis or Omaha. |
| Power Cost | $0.23/kWh – as of September 2025 | High renewable energy mix, primarily from regional wind and hydro sources. |
| Disaster Risk | Low (FEMA NRI Score: 14.92) – as of September 2025 | Very low risk profile makes it ideal for disaster recovery sites. |
| Tax Incentives | Yes | Includes significant sales and property tax abatements on qualified DC equipment. |
| Sales Tax | 4.25% – as of July 2025 | State-level sales tax; local taxes may also apply to certain services. |
Network & Connectivity Ecosystem
Sioux Falls is a regional connectivity point with an infrastructure well-suited for enterprises serving South Dakota and neighboring states. While not a primary national hub, it provides reliable and sufficient network access for most business applications.
Carrier Density & Carrier Neutrality The Sioux Falls market includes 4 data center facilities operated by 4 providers as of September 2025. This environment provides foundational options for colocation and local interconnection.
Direct Cloud On-Ramps There are no direct public cloud on-ramps located within Sioux Falls data centers as of September 2025. Businesses require private connectivity solutions, such as network wave or PNI services, to connect to cloud provider fabrics in major nearby hubs like Minneapolis or Omaha.
Internet Exchange Points (IXPs) The market does not host a major public internet exchange. Peering is typically handled privately between carriers or routed through network POPs in larger midwestern cities, primarily Minneapolis.
Bare Metal Bare metal server capacity is available in the region, often deployed to support specific workloads for local industries. Providers like Hivelocity and phoenixNAP can service deployments in edge markets or nearby hubs.
Power Analysis
The power infrastructure in Sioux Falls is characterized by its reliance on renewable sources and a higher-than-average cost for industrial users.
Average Cost Of Power The average industrial electricity rate is approximately $0.23/kWh as of September 2025. This cost should be factored into the total cost of ownership, particularly for high-density computing deployments. The grid's power mix is predominantly renewable, with significant contributions from wind and hydroelectric generation.
Power Grid Reliability The regional power grid is well-engineered and reliable. Data centers in the area are supported by redundant power feeds from separate substations, ensuring high levels of uptime for critical operations.
Market Access, Business & Tax Climate
Sioux Falls offers a favorable business environment, particularly for companies that can leverage its strategic location and significant tax incentives for data centers.
Proximity To Key Business Districts Data centers in Sioux Falls serve the city's strong financial services, healthcare, and agricultural technology sectors. Low-latency connectivity is a key advantage for local enterprises that depend on real-time data processing and transactions.
Regional Market Reach The market is a strategic location for serving end-users across the Upper Midwest, including South Dakota, North Dakota, Nebraska, Minnesota, and Iowa. It provides a valuable alternative for content delivery and application hosting that is closer to users than primary hubs like Chicago or Denver.
Tax Advantage For Data Centers South Dakota offers substantial tax incentives for qualifying data center projects. These programs provide exemptions and abatements on both sales and property taxes for computer equipment, software, and infrastructure. These benefits significantly reduce the upfront capital investment required to build or expand a data center footprint in the state.
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 physical security is one of the market's primary advantages.
The main environmental risks are weather-related. These include strong wind events, winter storms, hail, and periods of drought. The region has a minimal risk from major threats like earthquakes, hurricanes, or widespread wildfires, making it a highly resilient and secure location for deploying critical IT assets.
