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The Spectrum of Hyperscale Data Centers Tim puts hyperscale users on a spectrum: on one end there are first-party applications driving data center demand, and on the other end are third parties driving demand. What that means is that if a data center is providing cloud services — meaning that it has customers who are external to the business — it’s on the end where a third party is driving demand. Alternatively, if internal applications are primarily driving demand, then that's on the other end of the spectrum. Tim explains that understanding which end of the spectrum the hyperscale center is on determines the ability to predict future demand. With first-party applications driving data center demand, someone can actually look at data points like usage rates and historic statistics to understand how the application works and grows and gain insights that help improve performance. On the other hand, third-party applications can come with demands that data centers aren’t currently aware of. They can be running smoothly one day, but then instantaneously speed up and need more capacity the next day for reasons no one could’ve anticipated. Providing Flexibility and Speed Understanding this reality and preparing to meet the different demands of different hyperscale data centers is what makes Tim and his team so effective. Because they can look at the specific needs of each data center and clarify whether they’re operating in a predictable or unpredictable environment, they can plan accordingly — or at least they can know when they’re in a position where any plan might need to get thrown out the window. This situation demands flexibility from all involved. Some data centers may have extreme clarity in what drives their demand, making for fewer last-minute changes. But data centers that rely on third parties have to expect that demand may vary, and they may not be able to see that change in demand coming. Hence, flexibility is key and maintaining an emphasis on speed is crucial. It’s no secret that data center growth has continued to skyrocket over the last five to ten years (1Q 2021 has shown yet another period of growth across the globe). And with that growth comes an increase in the need to have a team that can handle the speed of expansion. Yet, not all hyperscale centers are capable of growing as quickly as they want to with the current size team that they have. That’s where someone like Tim comes in. One of his goals is to buttress the existing internal self-perform capacity of hyperscale centers with an external team that can help carry the weight. Whether the gap is in construction, sales, marketing, or something else, Tim and his team are always looking to step in and fill whatever roles are needed to facilitate the rapid expansion of hyperscale centers and their capacity. While more hands on deck may help a ship sail faster, there’s still an issue of certainty. A hyperscale center may be excited to have someone like Tim and his team to help, but they still have to ask: Can we trust where we’re going, and do we know if we’re going to get there? As Tim shares, understanding the different needs of different hyperscale clients is crucial to serving them in the most efficient and effective manner. Walking into a project with eyes wide open, understanding the overall market, and intuiting the individual needs of different data centers are three invaluable traits that make someone like Tim, and anyone else like him, poised for success.

Our talk with Bruce Lehrman about Involta’s business strategy contained some interesting details and pearls of wisdom. They discussed getting involved early in emerging markets, what it takes to open up a world-class data center in a new location, and what verticals have shown the most interest in Involta’s services. Surprisingly, it was often the healthcare industry that became early adopters of these new data center locations. Lehrman said that a lot of the companies he’s worked with have been ‘really focused on network latency from their core data centers and backup facilities to their primary hospitals and clinics. Given that some of these markets are off the beaten path, and healthcare infrastructure is often quite dated, these companies jump at the opportunity to upgrade their network capabilities. The Rewards of Hosting Healthcare Lehrman mentioned a positive aspect of hosting healthcare providers: The ability to forge a long-term partnership. Sure, the initial qualification and setup might be more painful than some other clients. But once that’s done, you may very well have a client for life. Once healthcare organizations have tech that works and that meets or exceeds their needs, they’re loath to move off of it. And on the flip side of the coin, once a HIPAA Business Associate establishes a friendly set of standards for one healthcare organization, it can be tweaked and applied to future partnerships in that vertical, all across the country. The first time is always the hardest. But that effort need not be duplicated for every new healthcare client. A second reward is community. Lehrman has set up advisory boards for hosting healthcare providers, made up of customers and non-customers alike. He uses these roundtables to keep abreast of the market and the upcoming needs and expectations of the industry. It’s not only a valuable feedback tool, but getting back to each individual about their concerns and feedback forms a connection… current customers become more trusting customers, and non-customers might have a reason to do business with someone they trust in the future. These benefits can lead to larger opportunities. Once one metropolitan area is taken care of, there’s a distinct possibility that the parent company will ask about opening small data centers in other parts of the country. That’s because healthcare providers, more and more often, are interested in a different kind of hosting model. They’re looking out towards the edge. Living on the Edge ‘The edge’ should also not be confused with simple mirroring, load balancing, or redundancy operations. Although aspects of these things might be included in edge architecture, they aren’t the whole picture. The edge is about decentralizing a data center. If a healthcare provider is dealing with highly latency-sensitive operations, such as remote laparoscopic surgery, they don’t want to go through a bunch of hoops to get to their destination. So providers find locations where they can host the client’s hardware and software as close to their demarcation point as possible. Alternatively, they set up shop at a low latency location somewhere between a healthcare organization’s headquarters and their metropolitan branch. Either way, the goal is to be as close to the ‘edge’ of the involved private networks as possible. This can mean more geographic expansion, more location scouting, and more time dedicated to clients when you’re hosting healthcare operations. But it can also mean establishing footholds in markets that the hosting provider can later expand further if there’s a demand. Lehrman mentioned that he’s seeing a big move towards decentralization, and within the next ten years quite a few medium to large-sized enterprises will fully take on edge networking. Involta is constantly looking at new tools and capabilities that will allow them to be as flexible as the client needs them to be.

Why Dallas Continues to Be An Attractive Market One of Flexential’s biggest markets is the Dallas data center market. Flexential has experienced continual growth in Dallas and their customers find this market attractive for their IT infrastructure. As Downie acknowledges, Dallas has been a destination market for enterprises for a decade or more and he feels fortunate to have participated in that. Still, there were questions as to whether or not Dallas was oversupplied and if this would lead to price compression. That being said, it seems that the Dallas supply is always consumed and Downie believes that we’re currently seeing a continuation of this fact. “I think there’s clearly been a change in product profile in Dallas in terms of what’s being built and some folks in the industry are solving for the very large-scale, multi-megawatt deployments and that just drives a price that, in comparison to history, would be considered compressed. But there’s still a significant amount of enterprise”. Specifically, Downie believes that the large retail and medium retail that’s going on in the Dallas data center market has remained consistently strong. Downie also acknowledges that another reason that Dallas is such an attractive market is that it has inexpensive land and power, along with the fact that the city offers tax benefits that are business-friendly. These factors have driven large-scale enterprise into the market in recent years. Further, from a network density perspective, Dallas is well-situated. Downie states that it is all of these various factors that continue to make him optimistic about continuing to operate in the Dallas data center market. What Types of Companies Favor the Dallas Data Center Market? While Dallas is an attractive market in various ways, there tend to be a few types of companies that favor the current market found there. For example, technology companies, insurance companies, and financial companies fit the enterprise user base that data center companies like Flexential have the ability to attract. Downie remarks on the fact that companies within these industries are those that have been both early and long-tenured consumers of what companies like his deliver. Flexential’s Potential Growth in the Dallas Data Center Market in 2021 As Flexential comes out of a difficult year in 2020, Downie remarks on the fact that, just as is the case in any year, his company will come out stronger in its ability to deliver a high-quality value proposition to their customers. For this reason, he expects 2021 to be an exciting year for the Dallas data center market. “A lot of the things that we were able to accomplish in 2020 position us well.” In the second quarter of 2021, Flexential will be opening up its largest data center ever in Hillsborough. This speaks to Flexential’s focus on continuing to drive the scale of its platform and its relevance for national-use cases. Further, Flexential’s Dallas expansion is an exciting prospect for much the same reason. “We’re very focused in 2021 on continuing to drive the evolution of the customer experience,” Downie says. He also says that it is a primary focus of Flexential to evolve its portal, something that is a differentiator for their existing customers. Finally, Downie says that they want to make sure that they’re focusing on building automation into the network platforms and remarks on the power of the FlexAnywhere Network in its ability to connect all of Flexential’s facilities together, making consumption easier than ever. It is exciting to watch Flexential’s growth and it seems that there are some potentially revolutionary things in the works for 2021!

From a data center perspective, whenever we approach the end of a quarter, there is always a lot of exciting data to review and trends to discuss. Today, we will be discussing all of the major European data center market highlights for 1Q 2021. We’ll also briefly touch upon the condition of the market at the end of 2020 so that we can better understand how the previous year played a role in launching us into the position we find ourselves in today. The European Data Center Market in 2020 2020 was a challenging year across various industries, the data center industry included. That being said, although 2020 was a year fraught with obstacles, it proved to be one of the strongest years that the data center industry has seen in recent memory - not only in terms of absorption but also in regards to the European data center market. When speaking to operators, it seems like the legal process of closing such deals took much longer than anyone anticipated. That being said, when taking into account the deals that should have been closed in 2020 and will now be closed in 2021 (as well as the deals already scheduled to close in 2021), the year ahead is shaping up to be potentially as good as 2020. Observable Challenges in Delivering Supply In 2020, there were observable challenges in delivering supply not only to primary European data center markets such as Frankfurt, Amsterdam, or London, but also to secondary markets. In the face of these challenges, we even witnessed demand transfer to other markets because of the lack of supply. This is largely an issue of providers pre-leasing capacity before it has been built due to the desire to remain in key markets. We have also observed development in tier 2 markets like Berlin and Zurich. These areas are not only taking capacity away from primary markets like Frankfurt but are also considered to be add-ons to those two markets. The power availability in some of the top European data center markets appears to be difficult to come by, as does the availability of appropriately priced land assets. This has resulted in developments outside of the traditional development zones. Anticipated Next Markets Another big trend that we’ve seen in the European data center market in 1Q 2021 is a dual strategy utilized by companies not only to lease large amounts of capacity but also to own and build it themselves. There has been an observable amount of anticipation surrounding where the next big markets will be located. In 1Q 2021, there seemed to be large amounts of speculation surrounding appropriate landmasses in tier 2 markets. Additionally, the competition for tier 2 markets seems to be potentially less than it is in tier 1 markets. Overall, the growth of the tier 2 markets has been anticipated. At datacenterHawk, we’re interested to see how the absorption rate of European data center markets in 2021 will impact 2022, as well as whether or not that demand continues or simply levels off for a period of time. Regulatory Environments in the European Data Center Market In some countries within the European data center market, we’ve seen significant growth. In others, however, we have observed a slow down of sorts because of changes made related to power or, perhaps, data sovereignty. From the European perspective, there is a huge push to lessen carbon emissions and reduce the impact on climate change. Overall, the last year has increased the profile for the sector. People have been astoundingly grateful for digital infrastructure and its ability to allow society to push forward in the wake of a pandemic fairly unencumbered. If you would like to dive deeper into 1Q 2021 North American and European data center data, click below to request access to Hawk Insight: https://www.datacenterhawk.com/request?feature=insightMarket&market=1Q21%20Hawk%20Insight

1Q 2021 Data Center Market Highlights: What We’ve Noticed and What to Expect With the first quarter of 2021 now complete and the second quarter of the year being well underway, datacenterHawk will be taking a look back over the key data center market highlights of 1Q 2021. Here, we’ll be discussing our top takeaways from the quarter, as well as touching upon our expectations for the second. Overall, while 2020 was one of the strongest demand years in the industry, the remaining market fundamentals in 2021 seem to be robust. Consistent Hyperscale Demand With 2020 being one of the largest growth periods in the history of the data center industry, many wondered just what the first quarter of 2021 would look like. What we quickly realized is that the expansion of hyperscale users- not just in the United States but in Europe and Asia- would continue to grow. While quarter one of 2021 didn’t see quite as much hyperscale demand in comparison to the previous quarter, demand was still consistent and stable. As we look to the remainder of 2021, we expect to see the continuation of a dual strategy from hyperscale companies who are looking to lease and own their data center portfolio. The Resurgence of Enterprise Demand Another key highlight that we can take away from Q1 of 2021 in the data center market is the resurgence of enterprise demand. While you could argue that this is a market by market trend, we view it as being a fairly holistic change. When COVID first hit, things went pretty quiet on this front. Now, there appears to be more RFPs in the data center market for requirements within a particular size range. This is an especially encouraging sign in terms of the beginning of 2021 and leaves us optimistic for enterprise demand to continue to grow throughout the remainder of the year. Key Changes in the North American Data Center Market Northern Virginia– Once again, Northern Virginia led North America’s data markets in terms of absorption. One particular change that leaves us feeling optimistic for the growth of this sector is the continuing growth of interest in locations like Manassas, Gainesville, and Leesburg. While most of this area’s demand has historically been placed on Loudoun county, we now see that demand expanding to the surrounding municipalities. Phoenix– Phoenix is a particularly interesting data center market in North America for a variety of reasons. In the minds of most, Phoenix can be divided into five different areas: the center of Phoenix, Chandler, Mesa, north of Downtown, and Goodyear. Some of the main advantages that can be found in Phoenix are reasonable costs, a competitive market, and the area’s unique ability to scale over time. While there are other markets with similar characteristics, Phoenix is unique in that its market has been validated by the big cloud providers. In terms of Q1 of 2021, demand was greater in Phoenix than the previous three quarters combined. This unevenness in demand highlights the “lumpiness” that is commonplace across the data center industry. Due to hyperscale users focused on maturing their portfolio in Phoenix, the area also experienced a significant uptick in leasing in the first quarter of 2021. With many in the industry seeing the potential for Phoenix to grow to be as robust as the Northern Virginia market, Q1 of 2021 certainly encourages such predictions for years down the road. Be sure to subscribe to our newsletter to stay up to date on the data center industry! – https://lp.datacenterhawk.com/stay-up-to-date

Understanding the challenges data center customers face is the first step toward providing them with a good solution. When Nicholas Laag, CEO and Managing Director of Prime Data Centers, was preparing to open new data center facilities in Sacramento and Santa Clara, his primary focus was on the end-user. The varying needs and demands customers have—from hybrid migration to combining the cloud with their own onboarding—make it crucial for data centers to be able to provide multiple solutions to the people they serve. This mindset makes it possible for data centers to look less like products and more like partnerships. Understanding both the customer's needs and the ways the data center can create a solution is the best way to create a healthy relationship between providers and users. Past behaviors won’t solve future problems Even as recent as ten years ago, data center operators were more likely to focus on the efficiency of the build, only thinking of how the project best worked within their needs and their capabilities. Now, however, it’s more about the operator working in tandem with the customer. That’s why Laag and his team focus on providing a dynamic environment that can provide adaptable solutions. For example, the Prime Data Center in Sacramento—which was chosen as a more cost-effective location to the Bay Area—was designed specifically with the idea of expansion in mind. Laag shares how at this location they have the opportunity to be 100% green, with the cost of power being significantly less than the Bay (and even less than Santa Clara). They also built this campus on a zone that allows them to have their own substation, which has 50 MVA of available power, as well as room for expansion. This allows them to work long-term with companies who may themselves be growing. Building the site on property with room to grow means now that the location is fully leased, they have the ability to increase the footprint and density by 33%. Instead of providing six megawatts per the original design, they’re now able to deliver eight megawatts to the customer. As Laag describes, “If you're not on point in terms of delivery speeds and design flexibility, you will be funneled into a small number of customers.” Having the ability to serve the different needs customers come up with will quickly separate the data center providers who are continuing with antiquated practices from those who are focused on adapting innovative and creative solutions. The COVID effect and looking ahead It’s no secret that the need for creative solutions stems, at least in part, from the increased demands on data centers as a result of COVID-19. Laag believes, however, that COVID is unlikely to have an exponential effect on the fundamentals of the industry. Across the world, data centers have seen an increase in demand, much of which comes from mobile work and remote offices. The pandemic has certainly accelerated the need for and use of mobile work technology that has been available, and it’s reasonable to assume some of these practices will remain. It’s the role of data center providers to understand this positive bump in data usage isn’t something to be counted on in terms of a business model. This again points to the competitive advantage flexibility provides. Being able to meet the heightened demands of customers during COVID-19 has been a real benefit to many data centers, but those who are prepared for a return to normalcy following the distribution of vaccines are best poised to maintain their current and new customers. As Laag shares, “You need two sides to dance.” Some customers are experiencing remarkable growth and their data center providers need to be prepared to grow with them. Yet, at the same time, when the growth wanes, these same providers need to be prepared to move in tandem with their customers.

Roger Süess of Green fills us in on the current state of the Zurich data center market in Switzerland, how it’s developed into what it is today. Check out our video above with Roger Süess of Green to get his take on the Zurich data center market. If you’re short on time, check out the summary of the conversation below. The Current State of Green Green’s current footprint in Zurich consists of 4 separate locations, 2 of which are large campuses focused on meeting the needs of hyperscale clients. Their other locations also serve hyperscale users, but provide space for traditional colocation use as well, and aim to be an IT solution for businesses wanting to enter into the Zurich market. Looking ahead, Green is planning on expanding their presence in Zurich with an additional 2-4 facilities in the city. The Development of the Zurich Data Center Market It’s clear that the Zurich market has been an area of data center growth over recent years. Robert mentions that people see this growth from major data center providers, such as Green, and show concern for potential overcapacity issues. He says that this is a valid concern but he looks at how the data center industry has changed over time and feels confident about the future use and growth of data centers. For a long time, many small to medium-sized businesses owned their own 4-5 MW facilities but recently that has shifted to these same businesses utilizing their IT needs from a data center provider. The data center trends that Green is seeing suggest that there will continue to be a need for additional space and power to come from a data center provider instead of smaller businesses owning their own IT space. Also, that’s without looking at the continued IT needs from the larger hyperscale users. With both of these trends, it’s a safe assumption that having an overcapacity issue will be minimal. We at datacenterHawk have recently started tracking the Zurich data center market. If you would like access to our data and analysis, you can request it here: https://www.datacenterhawk.com/request?feature=insightMarket&market=Zurich Or you can subscribe to our newsletter for general updates on the data center industry here: https://lp.datacenterhawk.com/stay-up-to-date

SkyBox Datacenters has had opportunities to grow in the past 2 years and only look to continue that trend moving forward. Rob Morris took some time to sit down and give datacenterHawk an update on how SkyBox has grown since we last caught up with him 2 years ago. Below are some of the topics we dove into during our discussion. Growth in the Houston and Dallas markets Since we last spoke with Rob, SkyBox has continued to expand in both Houston and Dallas. On their Houston campus, they’ve built several high-density, high power compute projects to bring their facilities to near full capacity. In Dallas, Skybox delivered their last building back in 2018 and decided to watch the market. They kept about 50 acres of land open for a potential build-to-suit opportunity and plan to expand in the market within the next 2-3 years. Opportunity in the midst of the pandemic In March 2020 when Northern America was hit with stay-at-home orders, there was a lot of pain felt throughout the nation. The data center industry is one area that was uniquely put into a position of opportunity and growth. With a vast amount of people suddenly spending more time at home, they turned to the internet to connect with others, which meant more data that needed a data center to live in. Plans for future growth Skybox is planning to expand in 2021, starting with a brand new campus in Elk Grove Village, a high-volume area for data center providers serving the Chicago market. Their first facility, which is currently in shell state, is slated to deliver 190,000 SF and 30 MW once completed in October of 2021. Looking forward We’re excited to see where SkyBox will go and the growth that’s in store for them moving forward. We’ll continue to track them and other data center providers on our platform in 2021 and beyond. Be sure to subscribe to our newsletter to stay up to date on the data center industry.

Below we’ll lay out exactly how we do it at datacenterHawk. At the end of this article, you’ll be able to take our approach and put it to use to help you succeed in your new role. What Data Center Market Research Can Do For You For some, data center market research might be a bit of an ill-defined, fuzzy term. Put simply, market research helps people understand how a certain product or industry is performing. Data center market research can help answer questions like: How much are people selling? How much are people buying? What price are they paying? What trends should I care about to help me make better decisions? Where should I take my business next to give me the best chance of success? Gathering Data You can find data from lots of different sources. Start with information from data center provider websites. They’ll typically list the facilities they operate, where they are, their capacity, and other infrastructure details. Brokerage reports from companies like CBRE or Cushman Wakefield are also great sources of market data. There are also data center market research firms dedicated to providing data and analysis. Many firms offer purchasable reports that they produce on a yearly cadence. Other companies have built online platforms that are easy to use and are constantly updated with real-time data. This is what we’re continuing to build at datacenterHawk. There’s nothing wrong with using good old Google to find out what’s going on. Frequently there will be press releases or announcements whenever a provider is expanding a facility or campus. You can also find announcements across social media. Standardizing the Data As you research capacity data, you’ll want to be pressure testing each data point as it comes in. For example, it’s fairly easy to find press releases about a provider adding a MW to a specific data center. But having 1 MW commissioned or available right now is very different than it being under construction or even just planned. Frequently this portion of the announcement is left off and you need to do some additional digging to figure out what they’re really saying. We recommend you only count commissioned and available power for the most accurate view of the market like we do at datacenterHawk. Verifying the Data As you piece together your market data, you’ll also want to pressure test how reliable the data is. Some firms will extrapolate their numbers with a top-down approach. This means they gather a few sample data points and assume the rest of the market shapes up along the same lines as their sample data. This is great for getting a quick read on the market but isn’t as bulletproof as a bottoms-up approach. With a bottoms-up approach, you go facility by facility in every market and roll up those capacity figures to the national level. This takes a lot more time than going top-down but it’s much more reliable. At datacenterHawk we take the bottoms-up approach to building our market calculations and we do it that way each and every quarter. Just Talk to People Some data just isn’t on the internet. It takes going to conferences, traveling to see people, and helping everyone you talk to along the way. The great part about this is you get to build deep relationships with the people in the space. We’ve even had lots of them on our podcast to talk about what’s transpiring in the industry. If you’re new, we’d love to talk to you too and see what we can do to point you in the right direction. You can also subscribe to our monthly update to get more great content like this along with hard data on the market.

Matthew Madden of DXN Limited talks about the state of Australian data centers and how they use autonomous mining vehicles to grow the IT industry with the edge. This is an episode of HawkTalk, datacenterHawk’s series of candid one on one conversations with executives and leaders in the data center industry. If you enjoyed this episode, you can check them all out on our blog. If you’d like to know when we release future episodes, you can subscribe here. Check out our video above with Matthew Madden of DXN Solutions to get his take on the Australian data center industry. If you’re short on time, check out the summary of the conversation below. Australian data center demand from international cloud providers When COVID became a global issue and a large portion of people began working remotely, they suddenly depended on the support of major North American cloud providers to conduct their virtual business. This sudden uptick in use caused these cloud providers to urgently fill the capacity that had been built in the Australian markets, so that they could provide the support to all the people now working from home. DXN is reducing latency in Australia with edge data centers Sydney is the largest city and the largest data center market in Australia. With that, the further users are from Sydney, which is on the southeast coast of the continent, the more latency they’ll have. DXN has focused their efforts on an edge strategy to get the data centers closer to the users with the goal of lowering that latency gap. Autonomous Vehicles Utilizing Edge Data Centers One area DXN has seen success with their edge data centers is supporting autonomous vehicles in the iron ore mines of Australia. DXN has seen the growth of autonomous vehicle technology in Australia, where that technology is used in the iron ore mines. Trucks and excavators in these mines are mostly operated remotely and to do that, a data center needs to be nearby so the latency is as low as possible. Seeing this need, DXN stepped in to offer their edge data center solution so their data centers could be placed close to the mines for these autonomous and remote-controlled pieces of mining equipment. Tracking DXN and the rest of the APAC market As we at datacenterHawk are excited as we continue to grow and expand our global data center industry information, we look forward to tracking DXN, the Australian data center markets, and the future growth of the APAC region. Be sure to subscribe to our newsletter to stay up to date on the data center industry.