Will Data Centers Continue To Be A High-Risk, High-Reward Asset Class?
Data centers are still in their infancy as an asset class, and Skybox Data Centers managing partner Rob Morris and DPR Construction project executive Andy Andres tell us data centers are changing as the industry matures. Hear more on this topic and anything else you ever wanted to know about data centers at Bisnow's Data Center Annual Investment event on Nov. 10 at Infomart in Dallas.
Andy has been building data centers for Facebook for several years and now is spending the bulk of his time building Facebook's new Fort Worth data center. (Here he is signing a beam at Facebook's topping out.)
Andy says data centers will only get more efficient in terms of space. As server technology advances, we'll see centers that can be smaller relative to the same capacity, he tells us.
That is, unless build-to-own projects continue to fall out of favor. Rob has seen fewer and fewer corporations, especially banks and other financial institutions, owning or building their own centers and instead leasing with providers such as Skybox.
Rob says that when co-location data centers were first built, there was clearly a quality factor missing. But today, users can lease space at a data center at comparable or better quality than what they could make themselves—and with much lower risk, Rob says.
But increased efficiency calls for better cooling systems. When you have more happening in a smaller footprint, cooling the fiber network becomes even more difficult, Andy says.
Increased need for cooling, servers and everything else data centers require puts a strain on energy. As server technology advances, you have limited power that you can pump into a building, Andy says. That's where renewable power options come into play for many centers. Facebook's will use some wind and solar energy.
Large enterprise users (like Skybox's clients) likely have a good grasp on how their budgets are itemized. Wholesale tenants are becoming more sophisticated at analyzing how much they pay for power, taxes, operating expenses, maintenance and everything else, Rob says. But tenants in retail co-locating contracts may not have such clarity.
Certain factors—labor to build and maintain the building, tax incentives, infrastructure, cheap power—still make DFW an especially favorable data center market, Andy tells us.
The data center market will become less risky as it becomes more established, Rob says.
Hear more from Rob, Andy and many other data center insiders at DICE on Nov. 10. Sign up here.