Bo Bond Talks the “Big Cloud Year” At Dallas Data Center Summit
by Josh Anderson
DALLAS, TX – The Texas data center arena has a lot to unwrap. However, sometimes the best way to dig deep is to zoom out and take a look at the bigger picture. That’s exactly how Bo Bond, Managing Director and Co-Leader of JLL’s Global Data Center Solutions Practice Team kicked off his keynote presentation “Don’t Get Hyper about Hyperscale!? Texas Regional Growth is in Enterprise” at CapRE’s 6th Annual Texas Data Center Summit in Dallas, with a broad look at the most important industry-wide trends and developments – including the latest goings on in the biggest data center markets.
“So let’s talk about some of the stats,” began Bond, pulling up the slide with a bar graph below. “I mentioned just a few seconds ago that these are from the first six months of the year. All of these are found in our annual report or on the JLL website. Now we’ve ranked them by municipality, or by major data center market, based on their absorption for the first half of this year. That’s red. And black is the absorption for the first half of 2017, while the grey would be the absorption for the first half of 2016.”
Next, Bond summed up the highlights. “So as you look at these numbers in comparison, it was the big Cloud year,” he surmised. “It was the year that all of the Cloud service providers (CSPs) took down multi-tenant data center space. And we had never really seen it in that large of an amount before. So, 78 megawatts of power were absorbed in the first half of 2016. Then in 2017 there was a little bit of a pull back. Because we never thought for a second that that many Cloud deals would ever come again. And they didn’t. But it was still a very sizeable amount – 41.”
Bond then fast-forwarded. “Then look at the number today,” he directed. “That is 168 megawatts that were absorbed in Northern Virginia in the first half of the year. that number alone is over half of the absorption in the United States. It’s huge. Now that does not count if AWS goes and buys a piece of dirt and build their own building and puts it into their portfolio. It just doesn’t count as absorption because it is not multi-tenant data center space, that a developer built and let. So that’s a massive, massive number and it’s all Cloud, content and social media driven. So when somebody takes down 75 megawatts from a provider, that’s a good day for that provider.”
“Phoenix is behind [Northern Virginia] this year at 19 [megawatts],” continued Bond, breaking it down market by market. “Las Vegas and Reno, we put into one market with 17. DFW did just under 17 – 16 and a half megawatts. In Dallas, per year, we’re typically 40-megawatt absorption market. We’re trending that way right now, so we’ve got a couple of deals that are pretty sizeable. And here I predict that we’ll be in that 40 megawatts as well. Chicago is right behind it at 15 and a half.”
“The Pacific Northwest is a little nebulous because it’s the high desert plain, right?” Bond mused, taking a bit of a pitstop into this region for some clarity. “It’s also some of Portland cutting into that market. And some of those markets get really thin and tough to report on if nothing transacts in a six month or twelve-month period. So we aggregate them, and whether that’s right or wrong, that’s what we did. And the Pacific Northwest did about ten this year. Austin and San Antonio, similarly, as themselves are very individually different markets, but we put them together just because of the volume.”
“Atlanta, surprisingly, is getting a lot of interest from providers who are taking down land. But we’re still not seeing a lot of large-scale absorption,” Bond illustrated. “So we’ll put a note beside that one based on the investors that are investing in either land positions or building buildings. Will they seal the deal to be able to return what their investors are looking for? And that’s Atlanta.”
“Then in Northern California, it’s always a crisis of available land, infrastructure, and just getting projects up off of the ground,” he shared, wrapping up this portion of his remarks. “That market would be more robust if they could bring a product to the ground, and if you were to look at 2016 in northern California, where they did almost 60 megawatts in the first half of the year, the product was there. Right now, there are half a dozen providers that would love to have a significant land position with power and four walls and physically can’t get it in the right market. So therefore they’re just unfortunately paying for their inability to get real estate out of the ground.”
Bo Bond is Managing Director and Co-Leader of JLL’s global Data Center Solutions practice team. He is a recognized leader in the real estate industry whose knowledge of technical issues, infrastructure, and labor assessment has allowed him to develop the unique skill set required for mission critical and contact center requirements.
For more coverage of Bond’s remarks, check out earlier CapRE Insider Reports: