To ensure delivery, please add newsletter@bisnow.com to your address book, learn how
June 2, 2014
The $100M Dollar Man
As our national Data Center & Investment Expo (we call it DICE) approaches June 26 and 27 in Washington, DC, one of our key panelists has a bit of news that illustrates just how hot the data center market is. Compass Datacenters looks to expand into new markets like Pittsburgh, Salt Lake City, and Georgia with a fresh infusion of $110M in capital. (They should keep it in $20 bills in briefcases like a James Bond villain.)
We got in touch with Compass' CEO Chris Crosby (here at a Bisnow event with Critical Project Services' Matthew Koerner) fresh from raising $35M in equity and $65M additional borrowing power in its KeyBank credit facility. “We're going to continue to expand into some new markets with clients,” Chris says. (They're like pioneers, except instead of horses they ride data servers, and they don't worry about scurvy.) Chris says they are riding on the backs of clients like Windstream, Iron Mountain, and CenturyLink with data center expansions that range anywhere from 22k SF to 26k SF, especially with private cloud and secondary facilities.
Most recently, Compass entered Minneapolis with a data center for CenturyLink. Chris says the industry is rapidly maturing to the point that general data center development is dwindling. Instead, he says, Compass and others are finding success in niche development that targets specific needs for clients. “I think you're going to see a rapid maturity where the data centers themselves will continue to be productized more so than this one-off type of basis. You can't deliver on the paradox of a high-quality product at low cost,” he says. “To be all things to all people means mediocrity.” We'd love to see you at our Data Center & Investment Expo (DICE) on June 26 and 27 in Washington, DC!
Validus Buys
It's buy time again for Carter Validus Mission Critical REIT. The data center investor recently purchased Ascent's 250k SF CH2 data center facility (above) in Chicago for $211.7M. CVMC REIT will provide fresh capital for the continued expansion of the facility, and Ascent will manage data center development, design, construction, engineering, and operational services. The site, which accommodates power requirements from less than 1 MW to up to 20 MW (why wouldn't you use it all? Because true heroism is having power and choosing not to use it), is CVMC REIT's largest single portfolio acquisition to date.
DFW's Dominance
What are fundamentals like in one of the country's top data center markets? To get an answer, we consulted with JLL's Bo Bond, who tells us corporate relos like Toyota and expansions like State Farm mean Dallas is on pace to lead the US in absorption in 2014. JLL is tracking about 30 to 50 megawatts of demand in the market; if half of those deals reach fruition, that would eliminate a large majority of the inventory for the next year. In an average year, DFW absorbs about 20 megawatts of data center space, Bo tells us. As of Q1, the DFW market already absorbed more than 13 megawatts. Data Center developers QTS, Digital Realty Trust, CyrusOne, DataBank, Zayo, T5, Equinix, and ViaWest are all expanding their footprints locally, he says.
Data center providers continue to build spec projects on their campuses or within their current facilities, too, Bo says. Because of the rapid absorption this year, many providers will be delivering space over the next three quarters. Also, look for a couple of new providers to enter the marketplace. (How do you say hello in binary?) Another trend to watch: data center providers developing from the ground up. Users are broadly adopting colocation, cloud, and managed services versus the older mentality of "I have to build, own, and operate it myself," Bo says.
NATIONAL BISNOW DATA CENTER INVESTMENT CONFERENCE & EXPO (DICE)
Our third annual Data Center Investment Conference & Expo (DICE) event will convene more than 500 data center real estate and facilities professionals to discuss the latest trends in investment, engineering, and development. Hear what's driving demand, impacting costs, and how deals are getting put together. And as always, network with your industry peers at the DICE Casino Night at the Renaissance Capitol View in Arlington, Va. DICE is a must attend for anyone in the data center world. Sign up today!
Why did the stylist hate cutting the mathematician's hair? 'Cause he had square roots. Tell us your other horrible math jokes to Jarred@Bisnow.com.
