Data Center Mythology Busters
The new model for data center development is collaborative.
In the movies and on TV the hero always knows the right thing to do, even when the required knowledge would seem to be just a bit outside his or her purview. It’s the cowboy who speaks the language of the tribe who steps in to turn their war party into a coffee klatch of mutual understanding between them and the settlers who are just looking for a little land of their own, or the martial arts guy who is not only able to kill and maim a bunch of nefarious henchmen but hack into the computer of the criminal mastermind to deactivate his nuclear warhead. We love these guys and we prove it every time we shell out $10 a ticket at the box office to watch them. Unfortunately, in real estate development, no one knows everything — which explains why no one makes movies about the subject. We do it for a living and even we wouldn’t pay to watch something like that — but being able to navigate through the intricacies of a local municipality to acquire and develop a site and build a data center on it is an essential requirement to meet the demands of today’s data center customers.
Timely delivery of a data center has always been an important consideration for the prospective buyer, but when your new cloud initiative turns out to be way more popular than you anticipated, you need space as quickly as possible. What this means for data center providers is that if you say that you can deliver in “x” months or less, you better be able to do it and since we’ve established that the lone hero is a foreign concept in the business, a close collaboration between the local development authority and you is a necessity. Everyone who approaches a city about a new construction project wants to complete it as quickly as possible but a tight partnership with the local development team ensures that the good people who run the various municipal departments that you need to deal with understand your project is a little more important than a new Pizza Hut.
Compass Datacenters’ recent project in Allen, TX illustrates the importance of these relationships to a successful data center project. Our project in Allen began when TierPoint, a leading colocation and cloud services provider, approached Compass about building a dedicated data center for them in the Dallas area. TierPoint had evaluated various options for building out additional data center infrastructure to support their rapid growth, and they had determined that a facility built specifically for them would meet both their technical and business needs. They approached Compass about the project in August of 2016 and charged us with securing a site, developing it and, ultimately, delivering the facility by March 31, 2017 — just seven months after the first conversations began.
Historically, the full process for developing a dedicated data center — which includes acquiring a site, obtaining all the necessary approvals, delivering a platted location where the data center will be constructed — can take up to 12 to 18 months, and that doesn’t even include actually building the thing. The length of this process is due to the number of entities that are involved in the process of approving plans, drawings, and even the design of the facility. To achieve TierPoint’s delivery date required that this permitting/approvals process be compressed into a few weeks, thus falling within the category of “really hard things to do that no one will ever make a movie about.”
Allen is a north Dallas suburb that is home to a few existing data centers and that sees these facilities as critical infrastructure for their economic development. Data centers are the building blocks of the economy today, as essential as the railroad was back in the 1800s, and the Allen Economic Development Corporation (AEDC) had worked with data center companies in the past to bring that infrastructure to the city. Compass had worked with the AEDC on a previous project in Allen, and started a dialogue with the group about this new project for TierPoint.
Through that past collaboration, Compass had learned from the AEDC that the city offered a package of incentives to compete with the other major cities competing for data center business in the Dallas area. The package itself included:
Sales tax abatements to provide equipment cost savings
Infrastructure grants that defrayed the costs associated with the development and construction of storm water containment facilities and in bringing the necessary utilities to the site
And, most importantly, fast track entitlement to aid in streamlining the various processes associated with municipal approvals and permitting
The last of these would prove to be critically important for meeting the rapid development timeline that companies like TierPoint have for these projects. We should note that these rapid development timelines are becoming the norm rather than the exception as trends like cloud deployments, massive IoT implementations, and the exponential growth of data drives the need for more and more data centers. New data centers are not just a nice-to-have project. They are an existential need for companies trying to keep up with the demand for IT services and data storage, and an existential threat when data centers cannot be brought online fast enough. In the past, 12 to 18 months may have been the norm for completing the site acquisition/permitting process, but that is increasingly a non-starter for new data center projects. Data centers need to be delivered faster — much faster.
Procuring a site is a real estate transaction that typically involves addressing issues that can take weeks or months to resolve. Even though Compass was very familiar with the property, TierPoint’s requirements dramatically reduced the normal window of acquisition. The contract needed to be negotiated in days and, more importantly, if the various permits and approvals required for entitlement could not be obtained in time, the sale couldn’t be completed in time for us to begin breaking ground in early October.
The AEDC, acting in a true partnership role, assured us that all elements of the streamlined entitlement process were in place. These assurances enabled Compass to sign a lease agreement with TierPoint prior to the completion of the final sale of the site.
Just like any project, everything looks great on paper: “Here’s the schedule. Everyone is going to make their dates and we’ll have no unexpected surprises, right? Great!” Well, in the words of Mike Tyson, everybody has a plan until they get hit, then all bets are off. In our case, the punch in the face dealt with how the site would deal with storm water. Storm water is not an uncommon issue on any data center project since, well, every so often it rains and your neighbors have no desire to live in a flood zone. The issue at hand was the result of an unusual convergence of factors, not the least of which was the fact that this project would be developed on a piece of land that would not only incorporate our desired site but also for regional rain retention facilities (storm ponds). Due to this optimum geography, we gained the responsibility of developing a retention system for the entire 100-acre location.
As you might expect, building retention systems for 100-acre areas tend to draw the attention of a few interested parties, which in this case included our neighbors, the city, TierPoint, and a gaggle of others. To meet with each one individually and maintain our schedule was not an option, the AEDC intervened to communicate with each of them to reduce the time to reach agreement with all involved and obtain the necessary drainage easements. Our solution was to construct three storm pounds that would be connected via underground piping and the removal of a choke point where the water flow meets a nearby highway. This solution also required the site’s power provider to relocate a power pole. To date we have received no complaints from any of the affected parties.
Naturally, building three storm ponds connected via underground piping was not part of our original budget. While we consider ourselves to be good neighbors, and understand that an effective way of negating the impact of rainwater is a good thing, we didn’t think that we should shoulder the entire burden of the cost of the effort alone. Situations like this often require that you negotiate directly with the city, but in this instance, the AEDC intervened on our behalf. They proactively took the lead in representing us with the appropriate municipal personnel and provided us with an infrastructure grant that substantially reduced our costs as well.
Every municipality has its own set of codes and regulations. Although they are often time consuming, they do help make sure that the roof of your new house doesn’t collapse in the middle of the night. Unfortunately, our delivery timeframe dictated a more accelerated process than usual. To alleviate the normal tension between getting it done and getting it done right, the AEDC and the city developed a fast track permitting process that eliminated processes that normally take up to six months so that we could perform our development and construction activities.
The AEDC’s commitment to the success of the project manifested itself in a variety of ways. A special project-related task force was created and included personnel dedicated to reviewing our plans and to coordinate the city’s building-related activities. The task served as our central point of contact and enabled us to quickly adapt or update our plans if an issue arose.
Our work with the AEDC was comprehensive as they were involved in every major element of the development and construction process. For example, every construction project receives regular inspections to ensure that all work is compliant with local codes. Due to scheduling issues, they can have a substantial impact on your delivery schedule. The AEDC worked with us to develop a “Just in Time” system that allowed all inspections to be conducted in concert with project milestones, thereby enabling our construction activity to proceed uninterrupted until the facility was completed.
The data center was turned over to TierPoint on the requested delivery date of March 31, 2017, six months from breaking ground and seven months from when they first approached Compass. No super powers were required, just smart collaboration to ensure that these projects meet everyone’s needs.
Based on the continued prolific growth in data generation, processing, and storage requirements the need for data centers will continue unabated for the foreseeable future. What this means for providers is that schedule requirements like TierPoint’s will become more prevalent. Although more providers talk about how fast they can construct a facility, it’s important to remember that the clock doesn’t start until the acquisition and development processes are complete. Speed to market will require providers to navigate the individual requirements of each locality faster than ever before. A task that will only be achievable through closer partnerships between providers and the economic development arms of their chosen locations.