Carry On Wayward Leasing Executives….the Data Center is Far From Dead

BOSTON, MA — If anything’s certain in the data center industry, it’s uncertainty. This industry is changing in many aspects, and so of course the way that deals are struck and cemented will follow suit. This was the crux of one of the signature panels at CapRE’s recent Boston & New England Data Center & Cloud Infrastructure Summit, “Carry on Wayward Leasing Executive: Best Practices for Brokers, Marketers and Attorneys as Deals Grow in Size and Complexities.” In this CAPRE Insider Report, we feature the insight of two regional thought leaders – one from the enterprise and one from a major colocation operator. 

“Let’s start with a general leasing question about 2019. We’re about halfway through the year,” began Moderator Brian Klebash, Founder & CEO of CAPRE. “What are you seeing? What types of clients? Has the type of client changed? Have the leasing terms changed, compared to last year at this time?”

“I think last year was overshadowed by a wave of hyperscale leasing. And that’s really captured everyone’s attention,” replied William Bentley, who heads Business Development at Iron Mountain Data Centers. “This year, we may see the same wave, but it hasn’t hit yet. And I’m seeing a healthy mix of anything from niche Cloud players to manufacturing, healthcare, insurance, and enterprise organizations in general. And also, some pretty strong public sector demand too. So for me, it started off a little bit differently than what we saw last year.”

“What is a niche Cloud player?,” asked Klebash, seeking some clarification.

“To me, I’m generalizing quite a bit, but I think of it as one of the smaller cloud players, a start-up, probably a well-funded organization, that’s trying to go up against the big 3 in some way shape or form,” answered Bentley. “So maybe not “niche” but, “up and coming.”

Next, the moderator looked to panelist Tina Gravel, Senior Vice-President of Global Channels, at Cyxtera Technologies, for more input.Well, last year there was a 16% vacancy local, and now this year, we still have a bit of vacancy,” replied Gravel.

”The market here is still strong,” she asserted. “It cracks me up when I see a title that says “the data center is dead” because that is certainly not the case. We have a proliferation of data itself in our world, and there’s more than enough to fill these data centers.”

“What you do hear about a lot, and we’ll see if my co-panelist here agrees, is the fact that the enterprise might be closing their data centers, and moving to the Cloud or a hybrid scenario in a colocation facility,” she continued. “I think it’s more about a shift in the demand, and not so much something dying, necessarily. AWS and Microsoft are some of my biggest clients. So I can’t say I don’t like hyperscalers or that they’re the bad guys – they’re just not. On the other hand, they have done a lot to change our business, and when you read those articles about those changes, we all know that’s some of what we’re reading about.”