CAPRE’s Denver Data Center & Cloud Infrastructure Summit Preview: Q&A with Brian Pate, Constructiv on a Changing City & Industry

DENVER, CO — Brian Pate is Director of Client Solutions at Constructiv, where he provides complex facility infrastructure solutions to ensure data centers perform consistent with business needs. Brian works with enterprise data center owners as well as colocation, cloud and hyperscale data center providers. He has been involved with numerous large-scale projects, including the design and build of complex power and cooling systems for the largest hyperscale cloud providers in world. Constructiv will be a featured sponsor at CAPRE’s upcoming CAPRE’s Denver Data Center & Cloud Infrastructure Summit August 13. In anticipation of the events, we connected with Pate to learn more about Constructiv, the challenges of the Colorado data center arena, and the most salient trends on Pate’s radar. 

CAPRE: Thanks for chatting with us today, Brian. Tell us about Constructiv and your differentiator.

Pate: Constructiv is a general contractor. We only focus on mission critical on data center expansions, upgrades, renovations or retrofits. Typically electrical, mechanical and plumbing requirements. For example, we’ll go into an existing space that wasn’t a data center, renovate the entire space, provide construction oversight, and then turn it over to the customer. We’ll also go into 20-story downtown buildings and retrofit a single floor to create a data center space that’s competitive in the marketplace.

What makes us different from other general contractor if that we’re really flexible on the services piece. We don’t have to just be a general contractor. We can provide a construction manager if the customer doesn’t want to manage it themselves. Or we can provide a safety manager if they already have a construction team they’re comfortable with. Our service set is flexible based don client needs. We can be an owner’s rep or just provide man-power (or woman-power). 

CAPRE: What is Constructiv looking forward to about CAPRE’s upcoming Denver Data Center & Cloud Infrastructure Summit?

Pate: We’re most excited to be involved with this platform and the exposure that it will bring from both national and international perspectives. That’s very easy for the Denver market and all of the surrounding cities that feed into this market. That exposure is so important, especially because Denver and the surrounding cities are usually considered tertiary markets. But what people don’t realize is that there are a lot of thought leaders here from both the telecom industry and the data center industry. Folks like Zayo, Flexential, CoreSite, Vantage, Cologix, Cyxtera, H5 Data Centers, CenturyLink, EdgeConneX, a lot of those leaders are based here and tend to look at this market with a microscope.

CAPRE: What kind of activity is Constructiv seeing in the Denver arena? How has it changed in the last year or so?

Brian Pate, Constructiv

Pate: It’s not too different than a year ago, except for the entry of JP Morgan Chase and their two big facilities they’ve been building out over the last few years. From a construction lens, we see a lot of retrofitting, renovation and upgrading of legacy data centers, as well as older buildings being turn into data centers. You see a lot of existing building construction inside of exciting core and shell.

We have a blend of data center operators and large enterprises and government entities that have facilities and space here. Then we have healthcare systems and some higher education institutions and a very large contingent of tech start-ups here that are only second to Silicon Valley. It makes the market attractive to data center operators and other companies. It’s just a healthy blend.

CAPRE: What are the most important economic or technological trends in the data center industry

Pate: Hyperscale deals are bigger than we’ve ever seen. It’s a good indication of the health of the dc industry and the colocation operator business. Those deals are growing in capacity and square footage – that’s huge for the data center industry and our specific business sector.

The hyperscale deals are also creating markets within markets. Some colos are really focused on 12-15 megawatt deals and above. And then we’re seeing deployments from other operators, maybe a step down or lower, that are strategically focused on 2-5 megawatt deals. And those are very healthy. There are these niche markets are on each side of the data center industry or the colocation industry, and they’re not taking away from each other. There are sub-markets inside of this market and those have come more predominant today than ever before.

CAPRE: What about private equity?

Pate: Infusion of private equity in our space is also larger than what we’ve seen in years past. The reason is that these new investors are seeing profit margins and ROI that they typically don’t see in the residential or mixed use applications that they’re used to investing in. That added bonus of new investment can also drive down leasing rates in these spaces. What that helps investors to get is the same kind of profit margins we were seeing years ago. And those returns are creating a competitive market and driving down leasing rates. We’re getting a lot of new investment and they’re looking to get specific profit margins. In order to get them, we’re seeing a drive-down on leasing rates. Which is good for the end user.

CAPRE: And what about on the construction side?

Pate: All of the hyperscale, enterprise and other segment growth that’s created all of this healthy capacity within the marketplace has created construction practices that have gotten significantly better in comparison to five years ago. Our hyper-focus now is on cost per megawatt and on speed to market – how quickly can you bring new kilowatts online? How can you drive down the cost per megawatt to ensure that the operators are getting the most bang for their OpEx buck? We’ve been able to do that by using virtual design and construction, and then off-site and modular construction, respectively. It’s made these highly repeatable construction practices that we can drop into place from the manufacturing floor.

CAPRE: What is the most exciting thing happening in the national data center industry?

Pate: Cloud computing is an obvious one. It’s completely revolutionized our industry as a whole. It’s created scale that we haven’t seen. What we thought would happen in the early 2000s is finally happening – capacity on such a large scale. But 5G and the surrounding technological advancements that come with it, we don’t even understand the full potential of yet. We don’t know what the extent will be of that in terms of the effect on our business. Three years from now, our business could be flipped on its head because of it. But what I do think it’s going to drive is Edge computing and Edge data centers – they’re going to be vital to the rollout of 5G. And those are all the most exciting things happening nationally.

CAPRE: What is the most challenging aspect of working in the Denver or Colorado data center arena?

Pate: In Denver and the surrounding cities, there are so many verticals being constructed at such an explosive rate. Residential is number one. There’s so much construction going on there in mixed used buildings, in industrial, in healthcare, that all of the other entities, are creating challenges in the local city and state municipalities. They don’t have the manpower to support the growth. Secondly, they don’t necessarily understand the data center business and how we construct them. It requires more knowledge and that puts more strain on city and state municipalities – they just don’t have the resources to handle data center technicalities.

CAPRE: What could Denver or Colorado community or industry (whether that’s buyers, sellers, operators, utilities, brokers and/or even lawmakers) do better?

Pate: The number one thing we can do is tax incentives. If we could figure out how to incentivize organizations that want to build and operate data centers inside of the white space through sales tax incentives, this market could be the net Phoenix. We could get those clients. We have unlimited land here too.

Also, we don’t promote free cooling. But we practically get free cooling year-round. If data centers want to operate here, there’s a lot lower OpEx cost to provide free cooling or direct evaporative cooling into those data centers. We don’t do a good job of promoting that we can do it at least 85% of the time. Or the renewable energy capabilities that we have here in CO – between wind and solar, the opportunities are endless.