Bo Bond Talks the Evolution of Data Center Contracts at TX 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.
One of those topics was contracts. “The contracts that users or customers contract with the multi-tenant data center providers, those contracts are changing dramatically,” he shared. “They’re becoming very flexible in the way they buy services or buy colocation space and power. Because what we find is that if there is a user that has had a contract with a certain provider over the last 7, 8, or 10 years, maybe this thing has rolled once or twice, that initial contract and what was deployed, well their future deployments are not going to look anything like what was deployed originally.”
“So the flexibility of the contracts are going to continue to change as their deployments change,” predicted bond. “And so we’re definitely seeing the completely rework of the construct of a contract and what it allows you to do.”
Next, Bond zoomed in on the large Cloud and social media expansions. “We’re going to talk really quickly here about what’s happening here in Northern Virginia with the massive amount of space that is being built and absorbed, but the social media, the Cloud Service Providers, are all leading the absorption,” he outlined. “As a matter of fact, Cloud Service Providers are over half of all absorption in the U.S. this year. So look for that to continue. And that excludes the Amazons and the Microsofts and the Googles and their peers that might take 200-300 acres in a marketplace and sell and develop it. My numbers won’t reflect that. So when Google announced or reported that they took 300 acres out near Dallas, those numbers won’t show up in our numbers because they are not multi-tenant data centers, publicly traded, or their brothers.”
Finally, he concluded the MTDCs are continuing to mature. “So I truly believe that the multi-tenant over the last ten years was typically built with a dedicated infrastructure. Then we started to see the distributed infrastructure. And if you go back to the pre-cursor for that, our original data centers were somewhat off-prem, they were the telco hotels, because of the connectivity side or the birth of the Switch,” recalled Bond, before making a prediction.
“I think we’re either going to push back toward connectivity driven facilities, or to the opposite – this data warehouse concept,” he envisioned. “Not as far as what the Blockchain and crypto guys were talking about, with four walls and vents releasing heat, but I do believe that, especially when we look at the large absorption in the marketplace from the Cloud Service providers, they are not needing all of the creature comforts that were built in to accommodate that 80-20 principle for the users.”
“Also, I don’t think that they are definitely telling their data centers, this is exactly what they need from the electrical systems and mechanical system,” he ventured. “And they are not dumbing it down, but they are becoming more precise. and it probably has less redundancy and therefore it’s becoming more of a data warehouse than a true data center. So I think they are maturing. And the best part about it is that the providers are listening and the ones that are reacting or being proactive are winning.”
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: