Data Centers in Memphis
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Memphis – Logistics Hub for Digital Infrastructure
Memphis serves as a critical infrastructure hub for companies requiring low-latency connections to the central and southeastern United States. Its strategic location, combined with favorable tax policies, makes it a strong choice for disaster recovery sites and content delivery networks looking to improve performance and reduce operational costs.
Memphis: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Solid connectivity for a Tier 2 market, ideal for regional distribution. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Nearest on-ramps are in Dallas or Atlanta; private connections are available. |
| Power Cost | $0.07 - $0.09/kWh | Industrial rates are competitive, supported by a diverse and reliable power mix. |
| Disaster Risk | High (79.70) – as of September 2025 | Primary risks are seismic, tornadic activity, and severe storms; requires hardened facilities. |
| Tax Incentives | Yes | DC-specific sales tax exemptions on equipment and power are significant. |
| Sales Tax | 7.00% (State) – as of September 2025 | Local taxes may apply; data center-specific exemptions offer considerable savings. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality: Memphis is home to over 14 unique network providers as of September 2025. The market offers access to multiple carrier-neutral facilities, providing diverse options for building redundant network architectures.
Direct Cloud On-Ramps: There are no direct public cloud on-ramps within Memphis data centers. Businesses connect to major cloud providers like AWS, Google Cloud, and Microsoft Azure through network providers offering private links to hubs in Dallas and Atlanta.
Internet Exchange Points (IXPs): Public peering is limited within Memphis itself. Most interconnection occurs via private peering inside local data centers or by connecting to major exchange points in nearby Tier 1 markets.
Bare Metal: Bare metal server options are available from providers operating in the Memphis market. Companies like Hivelocity can provide dedicated server solutions for workloads requiring high performance and control.
Power Analysis
Average Cost Of Power: Industrial electricity rates in Memphis typically range from $0.07 to $0.09/kWh as of September 2025. These competitive power costs help reduce the total cost of ownership for high-density deployments.
Power Grid Reliability: The power grid, managed by the Tennessee Valley Authority (TVA), is well-engineered and reliable. The energy mix is dominated by nuclear (48%) and natural gas (29%), ensuring stable and consistent power delivery to data center facilities.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers in Memphis are strategically located to support the city's massive logistics and distribution industry. Proximity to the Memphis International Airport, a global cargo hub, is a key advantage for logistics, healthcare, and e-commerce companies.
Regional Market Reach: From Memphis, organizations can effectively serve a large portion of the United States population with low latency. Its central location makes it an ideal point of presence for reaching markets across the Southeast, Midwest, and Gulf Coast.
Tax Advantage For Data Centers: Tennessee offers a significant sales tax exemption on the purchase of computer hardware, software, and electricity used in qualified data centers. This incentive directly lowers both the initial capital investment and ongoing operational expenses for tenants.
Natural Disaster Risk
Memphis has a High natural disaster risk profile, with a FEMA National Risk Index score of 79.70 as of September 2025. The primary threats are severe and require that data centers be built to modern resiliency standards. Key risks include earthquake, tornado, strong wind, and riverine flooding.
