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Data Centers in Texas

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Explore Markets in Texas

Texas – Central Hub for US Digital Infrastructure

Executive Summary

Texas is a premier market for enterprises requiring low-latency digital infrastructure with national reach. Its central location, massive data center inventory, and competitive power costs create a compelling environment for deploying mission-critical applications. For businesses targeting the southern and central US or Latin America, Texas provides a reliable and scalable foundation for growth.

Texas: At A Glance

FactorRating / DataNotes
Global Connectivity GradeA+Elite carrier density and central US location ensure low-latency routes nationwide.
Direct Cloud On-RampsOver 14 – as of September 2025AWS, Azure, Google Cloud (GCP), IBM Cloud, Oracle Cloud.
Power Cost$0.09/kWh – as of September 2025Below the national average, supported by a diverse and abundant energy supply.
Disaster RiskModerate (Score: 43.46) – as of September 2025Risks are well-understood and mitigated with modern data center engineering.
Tax IncentivesYesIncludes a significant sales and use tax exemption for qualified data centers.
Sales Tax6.25% (State) – as of Midyear 2025Local taxes may apply, but exemptions can significantly lower equipment costs.

Network & Connectivity Ecosystem

Texas is one of the most connected states in the US, anchored by the massive Dallas-Fort Worth (DFW) hub.

Carrier Density & Carrier Neutrality: The state features over 80 unique network carriers, as of September 2025. A healthy ecosystem of carrier-neutral data centers provides competitive options for interconnection, ensuring optimal routing and pricing.

Direct Cloud On-Ramps: With over 14 dedicated cloud on-ramps, Texas offers direct, private connectivity to 19 distinct cloud regions. Major providers include AWS, Google Cloud (GCP), Microsoft Azure, IBM Cloud, and Oracle Cloud. This direct access reduces latency and improves security for hybrid cloud workloads.

Internet Exchange Points (IXPs): The Dallas area is home to major peering exchanges like DE-CIX Dallas and the Equinix IX. These IXPs are critical for keeping local traffic local, enabling cost-effective, low-latency data transfer between networks.

Bare Metal: Bare metal cloud solutions are widely available from numerous providers. Companies like Hivelocity and phoenixNAP offer dedicated servers, giving businesses full control over their hardware environment for performance-sensitive applications.

Power Analysis

Average Cost Of Power: The average industrial electricity rate is approximately $0.09/kWh, as of September 2025. This competitive pricing, driven by a diverse energy portfolio of natural gas and wind, directly lowers operational expenditures for power-intensive deployments.

Power Grid Reliability: The Texas power grid supports major data center markets like Dallas, Houston, and Austin with redundant, multi-substation designs. While the statewide grid faces occasional challenges from extreme weather, the infrastructure serving primary colocation zones is well-engineered for high uptime.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers in Texas are strategically located near major economic hubs. Facilities in the DFW metroplex serve a massive concentration of finance, logistics, and corporate headquarters. Houston's data centers are vital for the energy sector, while Austin's ecosystem supports a thriving technology and research industry.

Regional Market Reach: From its central US location, Texas can serve over 40 million people within a few milliseconds of latency. It is also a primary gateway for network traffic to and from Mexico and Latin America, making it a critical hub for international business.

Tax Advantage For Data Centers: Texas offers a compelling sales and use tax exemption on equipment purchased for qualifying data centers. This incentive substantially reduces the upfront capital expenditure required for servers, racks, and networking gear, improving the total cost of ownership for large-scale deployments.

Natural Disaster Risk

Texas has a Moderate natural disaster risk profile with a FEMA National Risk Index score of 43.46, as of September 2025. While the state is large and geographically diverse, key risks for data center operators are well-defined and can be mitigated through site selection and facility engineering.

Primary risks include:

  • Hurricane: A significant consideration for facilities along the Gulf Coast, particularly in the Houston market.
  • Hail & Severe Storms: A frequent event in North and Central Texas, requiring hardened building shells and roof structures.
  • Heat Wave & Drought: Can strain power grids and water supplies used for cooling.
  • Ice Storms & Winter Weather: Can disrupt transportation and place stress on power infrastructure, as seen in recent years.
  • Riverine Flooding: A known risk in specific floodplains, mitigated by building facilities at higher elevations.
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