I've never understood the price issue. Class A in midtown Manhattan is $80 per square foot. That's $8,000 per year for a developer that probably makes well over six figures. Put two in an office that's only $4,000 per year. I really don't buy it considering how much money companies spend on office space. Like why he hell would you have offices in Greenwich Village ( http://www.businessinsider.com/facebook-new-york-of…
Construction sucks and is both a time and money sink. You can literally have a crew show up and build a big cube farm in 1-5 days.
It's really the same argument as "why would anyone pay outrageous fees to Amazon for slow, shitty VMs?". The answer is that when you factor in the cost of a data center facility and the people to build and run it, it turns out that AWS is a good deal after all.