- Digital Realty is asking Dallas officials to cut its required investment at its Bryan Street data center from $104M to $13M while keeping eligibility for a $2M Texas Enterprise Fund grant.
- The proposed amendment comes after “unforeseen circumstances and technical challenges” prevented the company from expanding as originally planned.
- City officials are recommending approval of the reduction but also calling for stricter job creation metrics and the removal of property tax abatements as part of a renegotiated agreement.
A Scaled-Down Ask
Digital Realty, one of the largest data center operators in the Dallas-Fort Worth area, is requesting a substantial reduction in its economic development agreement with the city of Dallas, reports Bisnow. Originally set to invest $104M into its 2323 Bryan Street facility, the company now seeks to meet its obligations with a far more modest $13M renovation.
Digital Realty aims to keep a $2M Texas grant despite scaling back its planned $104M investment to just $13M.
Background
In 2021, Dallas approved an economic development agreement tied to the expansion of Digital Realty’s downtown data center and office space. The deal included a 50% personal property tax abatement on qualifying equipment over five years and a job-based grant of $1K per new hire, up to $200K.
The company’s plan was derailed by technical challenges that prevented the capacity upgrades it had envisioned, according to a memo from the Dallas Office of Economic Development.
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Revised Terms
In light of the reduced investment, the city’s economic development office is proposing a modified agreement:
- Eliminate the personal property tax abatement
- Lower the job grant amount to $290 per new hire, capped at $50K
- Increase job creation targets to 175 positions
- Reduce the Dallas residency requirement for new hires from 35% to 25%
The company has already created 143 jobs at the site, with average salaries exceeding $120K.
A Regional Player
Digital Realty operates 13 data centers in DFW, including facilities in Carrollton, Lewisville, and Richardson. The Bryan Street site, known as DFW10, is the largest in the city of Dallas at 454K SF.
Outside of Dallas, the company has also signed recent agreements with Garland, where data center investments could approach $2B across two sites.
The Bigger Picture
The situation highlights the complexities of incentive-driven development in the fast-growing data center sector. Nationwide, business incentives rose to $38B in 2022, up from $7.5B in 2000, per the Cato Institute.
As more municipalities compete for tech infrastructure, balancing corporate flexibility with public accountability is becoming an increasingly high-stakes equation.
