In Part II of this series we discussed the technical aspects of acquisitions. Part III examines developing the pro form during an acquisition or property sale. Just to keep the record straight, my firm is not a brokerage or real estate advisor, but a very smart engineering company. While we might understand the concept of absorption rates, it doesn’t mean we perform complex real estate analyses. Similarly, just because a real estate broker knows what a UPS system is, doesn’t mean he can design one. However, it is the combined knowledge of the broker and engineer that creates the most accurate and convincing pro forma for both the seller and the buyer.
In Part IV of “Year-Long Road Trip: Getting to the Total Cost of Ownership (TCO)” (Mission Critical, August/September 2013 issue), I discussed the industry’s most recognized brokerage firms and their leading brokers with in-depth knowledge of the data center industry. The list really hasn’t changed much over the last year. What has changed are the markets that are expanding and the impact cloud providers have in a competitive environment against many colocation and managed service providers. Brokers that do comparison models now have to include cloud offerings in comparison to colocation/managed service providers (MSP). Whereas the typical MSP would provide reboots, cross connects, and other physical services, some have migrated to offer cloud services installing software and utilizing virtualization. When adding cloud software and support, the TCO study and the pro forma are skewed due to the software cost and cloud support during the standard real estate comparison model.