Data Centers in Sioux Falls

Sioux Falls – Secure Infrastructure and Tax Efficiency

Executive Summary

Sioux Falls is a strategic secondary market for enterprises requiring high physical security and geographic diversity. It serves as a premier destination for disaster recovery and long-term data residency due to its exceptionally low natural disaster risk and aggressive tax incentives.

Sioux Falls: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: Carrier count: over 4. As of December 2025, the market supports a stable ecosystem of ~5–10 providers. Connectivity is led by regional specialists and national players providing resilient fiber routes to larger Midwestern hubs.

Direct Cloud On-Ramps: 0, enabling access to 0 cloud regions. As of December 2025, no direct on-ramps for AWS, Google Cloud (GCP), or Microsoft Azure exist locally. Most deployments use private transport or wavelength services to reach the nearest on-ramps in Minneapolis.

Internet Exchange Points (IXPs): Sioux Falls lacks a major public exchange point. Local peering is typically handled via private interconnects or by backhauling traffic to the Midwest Internet Exchange in Minnesota.

Bare Metal: Local infrastructure providers offer managed hardware options for various workloads. Global bare metal services from providers like Hivelocity can be routed to the region for specific performance requirements.

Power Analysis

Average Cost Of Power: Industrial electricity is priced at $0.23/kWh, as of December 2025. This pricing supports operations with a stable energy outlook derived from a generation mix heavy on wind and hydroelectricity.

Power Grid Reliability: The local grid is purpose-built to support the high density of financial services and healthcare providers in the area. Data centers benefit from redundant feeds and multi-substation support to ensure consistent uptime.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Facilities are located near major financial and medical centers. This proximity is vital for the region's massive credit card processing and banking industries that require low-latency local processing.

Regional Market Reach: This market serves as a central connectivity point for the Northern Plains. It covers a broad geography across South Dakota, North Dakota, Iowa, and Minnesota, acting as a secure vault for regional data.

Tax Advantage For Data Centers: South Dakota provides certification-based tax exemptions and sales tax abatements on equipment for up to 35 years. These incentives significantly lower the total cost of ownership for hardware-intensive deployments.

Natural Disaster Risk

Risk Profile: Low (14.92) – as of December 2025

Sioux Falls is one of the most secure locations in the country for data residency. While the area faces seasonal weather challenges, physical risks to infrastructure are minimal compared to coastal or seismic zones.

• Cold Wave: Frequent seasonal events managed through seasoned local infrastructure response.
• Winter Weather: High probability of snow and ice handled by specialized facility management.
• Strong Wind: Factored into modern facility structural standards for long-term durability.
• Hail: Addressed through reinforced roofing during summer storm cycles.
• River Flooding: Modern data center sites are positioned well outside of primary flood zones.
• Heat Wave: Managed via efficient cooling systems leveraging the regional climate.