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Edge Data Centers: Opportunities For Northeast Real Estate – Real Estate – United States –


As we become more and more dependent on technology for both our
business and personal needs, cloud computing has become an
increasingly essential function.

Cloud computing supports on-demand access to computer system
resources, including data storage and computing functions, without
the need for local or direct active management by the user. Cloud
computing runs the gamut from the relatively simple storage of data
on a third-party server to complex webs or nodes that support
streaming services and software-as-a-service (SaaS) applications.
Large clouds often have functions distributed over multiple data
centers that are situated in strategically valuable geographic
locations that further support end users’ computing needs.

As cloud computing needs grow, the importance of data centers
– including edge data centers (discussed below) – grows
too. Data centers provide the essential infrastructure for cloud
computing, particularly for business applications. At its core, a
data center is a space (which can range from a technology park,
building or space within a given building, in suburban or urban
areas) used to house computer systems and associated components,
including telecommunications and data storage systems. Since
information technology (IT) operations are crucial for business
continuity, a commercial data center includes redundancy for power
supply, data communication connections (i.e., “bandwidth”
or “network” services), environmental controls (e.g., air
conditioning and fire suppression) and various security

While some businesses are big enough to run their own data
centers, most businesses seek out a third-party or “colocation” data center to provide this service. A
colocation data center is any large data center facility that rents
out rack space to customers for their servers or other network
equipment. This service is used by businesses that may not have the
resources needed to maintain their own data center. The data center
leases out space by the room, cage, rack or cabinet, for
customers’ servers, for the storage of data. Minimally, the
data center offers a controlled environment (e.g., redundant power,
HVAC, fire suppression and security); increasingly, data centers
also offer various managed services to attract more customers.

In the industry, data centers are categorized by tiers, with
Tier 1 being the lowest and Tier 4 being the highest level of
services and fault tolerances.

An “edge data center” is a data center with a smaller
footprint, that is typically utilized to deliver cached content and
cloud computing resources to network devices in a local service
area. An edge data center complements and supports edge computing,
which is a distributed IT architecture where client data is
processed as close to the originating source as possible, to
minimize latency. As an example, streaming services that need to
reach their subscribers over a wide geography need to supplement
their main data centers with edge data centers, so that content can
be delivered to the end user with minimal or no hiccups.

The consumption, use, storage and accessing of data is only
going to increase. The Northeast region of the United States
presents opportunities for owners and operators of data centers,
including edge data centers, to capitalize on that trend.

This white paper identifies and discusses: (i) the key
characteristics of edge data centers; (ii) key industry uses for
edge data centers; (iii) the Northeast-specific opportunities that
exist for property owners, investors and entrepreneurs, for the
development and operation of edge data centers; and (iv) business
law concerns and call-outs applicable to the data center industry
in general.

Introduction to Edge Data Centers

Latency1 has always been an obstacle to the optimal
computing experience, as users demand the quickest possible
responses to their computing inputs. As demand for big data,
wearable technologies, cloud and streaming services and other
technological trends continues to grow both in number of devices,
volume of transmitted data and number of users, minimizing latency
becomes even more paramount. Now, more than ever, end users and
devices demand faster, more reliable and more immediate access,
from anywhere and at any time, to the applications, services and
data housed in data centers. Edge computing and edge data centers
present a unique and cost-effective solution to these increasing
demands that, with the right plan, may offer interested real estate
owners, investors and entrepreneurs an opportunity for enticing
financial returns.

An edge data center (EDC) is a smaller data storage facility
that is located close to the population that it serves and that
delivers cloud computing resources and cached content to end
users.2 Typically connected to a larger, central data
center or multiple EDCs, the EDC processes data as close to its
users as possible, allowing organizations to minimize latency and
increase user experience.3 EDCs derive their name from
the concept of edge computing. Edge computing is the “distributed computing model which takes place near the
physical location where data is being collected and analyzed”
and which securely processes that data in real time, on
site.4 IDC, a global market intelligence firm, estimates
that by 2025, nearly half of data generated around the globe will
utilize edge devices.5 Edge computing is likely to
revolutionize and transform the way organizations process and
analyze data.

Key Characteristics of the Edge Data Center

In achieving the goals of reduced latency and increased end user
satisfaction, it is important to understand what defines an EDC.
While EDCs are defined somewhat differently amongst different
industries, the common characteristics of EDCs include that they
are: (i) local to the population they serve; (ii) small; (iii) part
of a larger, complex network; and (iv) just as “mission-critical” as their larger, centralized


EDCs are generally defined by their proximity to the population
that they serve and are typically found outside of smaller metro
areas. Generally, through the repurposing of underused commercial,
industrial and office spaces, EDCs serve to bring cloud services
and connectivity options to organizations while acting as an
intermediary between local and national resources in an effort to
reduce network congestion and provide quicker, less expensive and
more reliable access to distantly located services.7 For
example, Netflix may deploy its own hardware by placing an edge
device into an EDC in order to provide the benefits of the
proximity of its services to its users, i.e., a reduction
in core network traffic and latency thereby giving end users a
better experience while cutting its own bandwidth
costs.8 The local proximity of these EDCs effectively
addresses the problem of latency by managing the flow of data more
efficiently than where all users are connecting to the central core
of the network in order to access the data.9
Additionally, transmission costs may actually be reduced through
the utilization of local centers, which effectively reduces the
operator’s bottom line costs (which can be an important
consideration if operating within a region with higher energy
costs).10 Utilization of local centers by larger
companies such as Netflix and Amazon is likely to expand in the
years ahead.


EDCs are constructed to be small-to-mid-sized versions of their
counterparts within the larger network. These centers maintain all
of the same components as the larger, central data centers, but are
packed into a much smaller footprint.11 Given their
size, EDC infrastructure is often less costly to acquire and
maintain than the larger, central data centers.12 A
study conducted by Schenider-Electric found that development of an
EDC represents “a 42% savings over a centralized data
center.”13 EDCs can also more easily be adapted and
scaled to accommodate growth in IT gear and the number of users and
devices as the need for more computing arises.14 The
adaptability of these smaller data centers results in cost savings
by allowing operators and organizations to utilize only those
services and IT gear that are necessary. Further, building a
dedicated data center for an organization’s own enterprise may
prove too costly for some, particularly if future growth and need
cannot be predicted with certainty. EDCs allow these organizations
an affordable and adaptable outlet to tap into as their IT
infrastructure needs change, thereby increasing the attraction of


1. See PC Magazine,
(last visited June 15, 2022) (“Latency may refer to the time
between a query and the results arriving at the screen or the time
between initiating a transaction that modifies one or more
databases and its completion.”)

2. What is an Edge Data Center?, Sunbird DCIM,,cached%20content%20to%20
(last visited May 24,

3. Id.

4. What is Edge and Why is it Important, Stratus,
w3QKAr9IShJVz4uZQGxUFP5oJk3dmnR25xoCmoUQAvD_Bw (last visited June
15, 2022)

5. Id.

6. 4 Key Characteristics of Edge Data Centers, Sunbird
(last visited June 15, 2022).

7. David Chernicoff, Postcards from the Edge, (Oct. 26, 2015),
(last visited June 15, 2022).

8. Id.

9. Simon Besteman, Why Does 5G Need Edge Computing in a
Micro Data Center, Kingston Technology,
(last visited May 24, 2021).

10. Peter Judge, Counting the Costs of the Edge, Data
Center Dynamics (Aug. 27, 2019),
counting-cost-edge/ (last visited September 12,

11. 4 Key Characteristics of Edge Data Centers, supra
note 6.

12. Counting the Costs of the Edge, Data Center

v13. Victor Avelar, Cost Benefit Analysis of Edge Micro Data
Center Deployments, Schneider-Electric, (https://download.schneider-electric.
(last visited September 12, 2022).

14. Id.

15. Mary K. Pratt, Top 5 Benefits of Edge Computing for
Businesses, Tech Target (November 29, 2021),
tip/Top-5-benefits-of-edge-computing-for-businesses (last visited
September 12, 2022).

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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