Year Long Road Trip Part IV: Selecting a colocation/wholesale data center provider.
SELECTING THE DATA CENTER BROKERAGE COMPANY
Within the industry there are multiple brokerage companies that offer data center selection services. However, only a few have the knowledge and expertise needed to provide sound consulting when it comes to data center site selection. A true data center brokerage company has extensive experience with data center providers and is familiar with the pricing structure that is not common within the typical real estate transaction. There are multiple offerings in the market that vary from data center provider, including;
- Wholesale provider – typically offers ready-built data centers and constructs their contracts on a cost per power basis (kW).
- Colocation provider – this offering usually is based on a per cabinet basis (or caged), structuring their contract on a cost per cabinet basis. This can also be a shared infrastructure scenario in which a user may share PDUs, UPS, and cooling infrastructure.
- Managed services provider – offers both outsourcing services and data center infrastructure services. Contracts vary from minor reboots to full staff outsourcing and disaster recovery.
A data center brokerage company should be familiar with each type of contract and the nuances from one provider to the next. Chances are they have navigated through the process many times and can give advice concerning the comparison of one type of data center provider to the other. They are also well versed in developing requests for proposals (RFPs) that address square footage, power, cabinet costs, history of the company, financial status, and pricing structures.
In approaching a typical brokerage company they will all say they can provide brokerage services within the data center industry. However, only few have true data center expertise and an experienced staff. Some of these companies include (in no particular order):
- Newmark Grubb Knight Frank (NGKF) – This group is headed up by Bryan Loewen, senior managing director, and Todd Bateman, managing director of their Data Center Consulting Group. The group is divided into two separate units to ensure objectivity when selecting a site. The first is the tenant group, which represents the data center user, and the other is the building listing group that supports large data center providers.
Cushman and Wakefield – C&W Data Center Practice is extremely focused on both tenant representation and building listings. Alex Smith based in Chicago, and Sean Ivery in San Francisco, are extremely knowledgeable about their markets. In addition, Miles Loo is perhaps one of the most renowned data center appraisers in the market, analyzing approximately 70% to 80% of the data center portfolios and valuations.
A data center brokerage company should be familiar with each type of contract and the nuances from one provider to the next.
Chances are they have navigated through the process many times and can give advice concerning the comparison of one type of data center provider to the other.
- CBRE – offers a national presence in both data center tenant representation and building listings. CBRE has perhaps the largest network, headed up by Chad Freese in Chicago, and Patrick Lynch in Denver. CBRE is one of the first in this market, and has extensive history within data centers.
- Jones Lang LaSalle – This firm is one of the largest data center tenant representatives within the U.S. and Europe. Matt Carolan and Sean Reynolds of Chicago excel at both data centers and trading clients. Bo Bond in Dallas is also considered a leading authority within the data center industry. In addition, JLL’s annual data center market survey in Europe offers valued information within the industry.
DATA CENTER PROVIDERS WITHIN THE WHOLESALE MARKET
After selecting a data center brokerage company, RFP’s are created and submitted to the top leading data center providers. The RFP’s focus on square footage, independent infrastructure, cost per KW (rent), cost for power (kwH), service level agreements (SLA’s), and scheduling. The comparisons are typically created within a report outlining the advantages and disadvantages of each company.
Some of the leading wholesale providers include:
- Digital Realty Trust – DLR is the largest data center wholesale provider in the market and offers several advantages including; cost (due to its bulk purchasing program), geographical offering, ready built environments supporting “speed-to-market,” and knowledge/history with data center design and construction.
- DuPont Fabros – DFT is a REIT offering a wholesale model which often includes shared mechanical infrastructure. DFT also has a large geographical footprint and the second largest in the market. A unique offering with DFT is the use of rotary uninterruptible power supply (UPS) modules.
- Equinix – This company is perhaps the largest colocation provider and has been around since the .com age. Equinix has an extensive network that allows an enterprise user connectivity to multiple cities around the world. Contracts are usually based upon a caged basis or cabinet basis.
- Savvis – Savvis, too, was started during the .com era and also has an extensive footprint. The company specializes in similar offerings to Equinix, and also offers managed services.
Other highly regarded companies include Data Realty, CoreSite, Sabey Data Centers, QTS, Server Farm, Latisys, Stream, Compass, Ubiquity, T5 Data Centers, and Zayo.
TECHNICAL REPRESENTATION DURING COLOCATION REVIEW
Working closely with the brokerage company, a data center engineering firm should be considered to evaluate each of the potential sites or facilities. Within the last column, I discussed some of the key components of evaluating the data center infrastructure including; PUE, concurrently maintainable, shared infrastructure, and reliability. The engineering report is often included within the brokerage report offering a comprehensive evaluation of each data center provider.