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Microsoft Corp. has purchased 316 acres in southern Kent County from Steelcase Inc. for $45.3 million for a potential data center development, Crain’s Grand Rapids Business has learned.
The irregularly shaped vacant property is located south of Grand Rapids in Gaines Charter Township, at the northwestern corner of the Patterson Avenue and 76th Street intersection.
Microsoft has not yet announced plans for the site, but The Right Place Inc. helped the company assess the property for a potential data center, said Randy Thelen, president and CEO of the economic development organization.
Microsoft officials have yet to meet with Gaines Township leaders and have not shared any potential development plans, said Dan Wells, community development director of the township’s planning and zoning department. The township is in the process of reviewing a non-disclosure agreement with Microsoft related to the property acquisition, Wells said.
A Microsoft representative could not immediately be reached for comment.
Last year, Steelcase successfully pursued the rezoning of the two adjacent parcels at 4149 and 4450 76th St. SE to light industrial from previous agricultural designations.
“At Steelcase, we have been implementing a long-term, multi-year strategy to divest excess land in the West Michigan market,” Katie Benton, director of corporate communications at Steelcase, said in an emailed statement. “This transaction is the latest in that series.”
A data center would be allowed in the light industrial category, Wells said, adding that such a use would have minimal nuisance issues except for visually. The planning department would try to manage that with any future data center developments by requiring various screening and landscaping methods, Wells said.
The township also is in the middle of updating its zoning ordinance, and “data centers” will be added as a permitted use for industrial-zoned property, he said.
A series of industrial users have shown some interest in portions of the former Steelcase site since the rezoning, Wells added.
“I was kind of hoping we’d be able to get a couple of smaller companies in there,” Wells said.
Advantage Commercial Real Estate had been tracking the Steelcase property because it represented several clients recently that were interested in the site, John Kuiper, CEO of Advantage Commercial Real Estate, told Crain’s Grand Rapids Business.
One user buying up such a large chunk of industrial property will affect the broader industrial market in the area, Kuiper said.
“It diminishes the availability of land for other local users to continue to develop and buy for their own use,” Kuiper said. “It definitely changes the landscape a little bit. We’re working with a number of companies looking for 20 to 40 acres, and it’s incredibly difficult to find something that is zoned, has roads and utilities.”
The fact that data-storage company Switch opened its facility nearby in the township in 2017 and keeps expanding shows that Michigan can support data center projects, according to Kuiper.
“There is a lot of development going on for Switch itself,” Kuiper said. “There is clearly increased demand, and people are OK with this area (for the) future construction of data centers.”
Indeed, some state lawmakers have attempted to court the industry by passing tax breaks for large investments. In recent months, lawmakers considered a pair of bills — House Bill 4906 and Senate Bill 237 — that would give breaks on sales and use taxes, respectively, on companies’ equipment if it invested at least $250 million.
While both chambers have passed versions of the legislation, neither bill has reached Gov. Gretchen Whitmer as lawmakers remain divided, including Democrats who have raised concerns about facilities’ electricity and water use. In Microsoft’s potential case, Gaines Township is a wholesale water customer of the city of Wyoming.
If successful, Michigan could be the latest target for Microsoft’s massive, multibillion-dollar data center buildout that’s taking place in surrounding states:
As data centers are notorious energy hogs, Microsoft also inked a 20-year power purchase agreement with Baltimore, Md.-based utility Constellation Energy that would involve restarting a shuttered nuclear reactor at the Three Mile Island nuclear plant in Pennsylvania. The deal was Constellation’s largest ever power purchase agreement, and is designed to meet Microsoft’s growing power needs for data centers.
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