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Data Center Demand Fueling Building Boom by PTS Data Center Solutions, Inc.

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Demand Fueling Data Center Building Boom

By Ann Bednarz, NetworkWorld.com, 03/06/06

Developers are set to break ground in July on a project in Austin, Texas, that's been conceived as a giant park for data centers. The 350-acre project, managed by Zydeco Development, is part of a wave of new data center construction.

Across the country, enterprise demand for advanced data center space is driving new construction projects, ranging from single-occupant buildings to mega-sites such as Zydeco's MetCenter.

Many companies that avoided doing any data center upgrades for the last four or five years find they can't put it off any longer, says Ron Hughes, president of California Data Center Design Group in Gold River. "A lot of companies have now gotten to the point where they don't have the capacity to support today's technologies. It seems like everybody's either remodeling or building a new data center."

The technologies necessitating data center upgrades include blade servers, which consume a greater amount of electrical power per square foot than traditional rack-mounted servers. "The energy draw -- both incoming power and outgoing heat -- of these new blade server technologies is such that it requires new technology within the data center space," says Russell Senesac, a director at American Power Conversion (APC), which sells power and cooling devices for data centers.

Another contributor to rising power consumption in data centers is the proliferation of mobile devices. Each BlackBerry device that a company deploys, for example, translates into about six 60-watt light bulbs of energy in the data center, Senesac says.

The cumulative impact of technologies such as these can overwhelm many existing data centers. Two years ago, people considered a hot rack of servers one that would draw 2 or 3 kilowatts of power and give off an equivalent amount of heat, says Fred Stack, vice president of marketing at Liebert, an APC competitor. "Today many people will tell you their average rack is running at 6 kilowatts, and they've got hot ones running at 20 kilowatts."

Keeping each of these hottest racks cool can require 12 tons of cooling each year -- the equivalent of cooling "four houses in one little two-foot-by-4-foot rack," Stack says.

Regulatory requirements, too, are pressuring companies to upgrade their data centers. In particular, legislation such as the Sarbanes Oxley Act is forcing companies to pay more attention to the physical environment where their IT resources reside. "The server closet down the hall isn't adequate any more," Senesac says.

These trends are driving many companies to plan significant upgrades to their existing facilities or seek out new data center space.

One indicator of just how hot the market is getting is lead times for materials, Hughes says. "We're always watching lead times, and they're continuing to go up." For example, it now takes about six to eight months to get a large, 2-megawatt generator. "That's a huge change from two years ago, when you could have gotten one in six weeks," Hughes says.

Howard Yancy, Zydeco's president, believes demand is strong enough to fill the portion of its 550-acre MetCenter project that's dedicated to data center construction. The first 200-acre phase of MetCenter, now complete, is a mixed-use development including hotels, restaurants, traditional office buildings and light industrial space. The second 350-acre phase is all about data centers.

From the start, Zydeco made sure MetCenter had the site attributes required to attract data center users -- including a massive, redundant supply of electricity. "We have two electrical substations on site, each of which is capable of up to 400 megawatts of power. Each substation, in turn, is fed from a different power source coming in to the Austin power grid," Yancy says. MetCenter also features three integrated fiber-optic loops around the park.

To attract different occupants, Zydeco gives customers a choice of either buying land and building their own data center facility, or leasing a data center built to company specifications. "We want to be flexible. If they want to come to our park, they can come any way that they want to," Yancy says.

Glut no more

Today's rising demand for data center space is in sharp contrast to conditions five years ago, when tenants for data center projects conceived in the Internet heyday failed to materialize, and developers were left with a glut of data center space.

Investment groups and others bought the vacant data centers at bargain-basement prices, rehabbed them, and found increasing numbers of tenants over the last few years willing to pay increasingly higher prices. Now there's little of these remnant data centers left unoccupied. "The demand right now is such that anybody who has a data center has a very valuable piece of property. Whereas three years ago, you couldn't give them away," Hughes says.

One group driving today's construction boom are colocation service providers such as Savvis and Equinix. Having absorbed much of the available post-bubble properties, they're each planning large expansion projects as well as new data center projects. Corporations, too, have plenty of new construction projects on the boards. GM, for example, is rumored to be building 10 new data centers next year, Hughes says.

Likewise, Pete Sacco, who is president of PTS Data Center Solutions in Franklin Lakes, N.J., says he's getting work from enterprises and service providers. Sacco recently surveyed past, existing and potential clients to get a handle on future demand for his firm's services.

"We found 11% of respondents said they would be moving from their data centers into colocation or managed service facilities. Conversely, 11% also said they were going to be moving equipment out of managed service facilities and back into their own facilities," Sacco says. "That means 22% of people are doing some kind of data center project."

On the corporate front, large and small companies alike are tackling new construction, Hughes says. Data center projects for Fortune 500 businesses tend to range in size from 60,000 to 100,000 square feet, as compared to 3,000 to 20,000 square feet for smaller companies. "We're really seeing a mix in the market right now, from all different size companies," Hughes says.

Speculators, too, are back in the game. In northern Virginia, Cokomo LLC plans to build an $80 million, 140,000 square-foot data center, according to published reports. Like Zydeco's MetCenter, Cokomo's is a speculative project, meaning the developers don't have tenants lined up in advance but hope to secure them by the time the project is completed in February 2008.

Building data centers on spec was rampant in the late 90s, but the practice all but disappeared after the tech market bottomed out.

Zydeco's Yancy acknowledges it's a bit of a gamble. "It's speculative in the sense that we're spending a bunch money for the infrastructure that we wouldn't normally spend for a typical business park. We're spending that because we feel very strongly that demand is there. Could we be wrong? Yup. But we're going to make the investment anyway."

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