CBRE’s Mike Lash Predicts More Sale-Leasebacks & More Hyperscale Deployment in ATL | “We Don’t See This Trend Slowing Down”

ATLANTA, GA – CAPRE’s Fourth Annual Greater Atlanta Data Center & Cloud Infrastructure Summit kicked off with a keynote presentation titled “State of the Greater Atlanta Data Center Market,” by Mike Lash, Senior Associate at CBRE Data Center Solutions, a firm which manages 80 Million square feet of raised floor space within enterprise, colocation and hyperscale data centers.

In this keynote, Lash offered a lay of the land of the data center industry locally to Atlanta to illustrate that data centers aren‘t going anywhere, but who owns them and how they’re being constructed is changing. After some remarks about the national data center industry as well as the market forces that are driving more demand to Atlanta, Lash honed in on the latest data center activity in the region, specifically in Lithia Springs, which he described as the “new hot spot.”

“Lithis Springs is taking full advantage of using tax incentives to attract new data center providers,” Lash began. “You have STACK Infrastructure & T5 Data Centers, both of whom have land in the area; CyrusOne which is growing very fast in that area today, and Switch, who will have their first deployment done by the end of 2019, with up to 10 megawatts of power and up to 16,000 square feet. Digital Realty also has some real estate over there, with Cyxtera in that building, and AT&T’s assets, which are now [part of] Evoque Data Center Services. We haven’t heard much from them yet but they do have space and power and a tenant.”

Next, Lash took a look at the east side of town, where hyperscale is the name of the game. “We have Google and Facebook. Google is on the west side, but what is exciting about the east side, is that it has literally just created a data center market by deploying there,” he explained. “They’re planning on, over the next ten years, to invest $14 Billion USD in Atlanta, which is the largest investment in Georgia’s history. The most recent statistics that we have, which just came in today, show that they’re going to turn over 37 megawatts of power by the end of the year. By 2020 they’re going to do another 37 megawatts.”

Mike Lash, Senior Associate at CBRE Data Center Solutions

Interestingly (and essentially), CBRE doesn’t typically track hyperscale – but according to Lash, if you were to just track hyperscale alone, the number of megawatts coming online in Atlanta is, by his words, just unbelievable. “Amazon and Microsoft are still yet to be here in the hyperscale world here, but if you track the hyperscalers, you’ll see that it’s only a matter of time,” he predicted. “They tend to follow each other.”

“I will also say that right now we’re tracking just the five major hyperscalers, but there are probably two or three major players that haven’t even emerged yet in that space,” he continued.” To be clear, Lash isn’t just talking just about providers – he is also talking about users. Specifically, colocation users that have turned to hyperscale as new technology has come online and demand and need has arisen.

Next, Lash spole about sale-leasebacks. “Because of all of these on-premise data centers – and Atlanta is actually above the trend, since 75% of enterprise users still have data centers on-premise – there is a growing attraction to sale leasebacks,” he explained. “You don’t want to run your data center anymore, you’ve already outsourced your staffing to CBRE, and you want to get out of the data center business. Instead of moving to colocation, you could have colocation move to you. And so this is creating some new players, which aren’t as sophisticated within the market, to come in and basically buy business, and get into the data center business.”

“This has happened in Atlanta with PWC, and with e-Trade and a few other enterprises so far,” listed Lash, preparing to conclude this portion of his remarks. “We don’t see that trend slowing down. There are a lot of enterprise clients in Atlanta, a lot that have data centers, and they said, Do we want to spend the capex to re-invest this thing for ten more years, or how about we have someone who specializes in data centers turn this into a multi-tenant data center? We’d name our pricing, and we’ll control how we want [use it].” In other words, this is a huge trend, largely because of the amount of capital entering the data center industry.

For more coverage of Lash’s keynote presentation, check out previous CAPRE Insider Reports:

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