How Will Multi-Tenant Data Center Operators Adjust to Meet Hyperscale Demand? Look Beyond Ashburn for Affordability

LEESBURG, VA – CAPRE’s seventh annual Mid-Atlantic Data Center Summit sought to shed some light on the impact of hyperscalers on the colocation game, so we gathered a crew of highly respected thought-leaders who are active in Northern Virginia to opine on how hyperscalers are changing their business model. The panel How Traditional Multi-Tenant Data Center Operators are Evolving to Meet Hyperscale Cloud Growth: Challenges & Opportunities sought to showcase both the challenges that the hyperscalers have brought, and the opportunities. In this CAPRE Insider Report, we cover a roundtable take on how providers are adjusting (and customizing) their builds and timelines to accommodate the needs of hyperscalers.

Steve Conner, Vice-President of Sales & Solutions Engineering, Vantage Data Centers

For example, Steve Conner, Vice-President of Sales & Solutions Engineering at Vantage Data Centers said that renewable energy is becoming more and more important. “We’re seeing a higher demand for sustainability – not just green energy,” shared Conner. “That’s something we’re seeing that’s really being pushed onto us – and a lot of hyperscalers are really, really starting to focus on security – which is not part of the build. But we’re being asked on it and audited on these things, which is different than anything we’ve had to do as a provider. Now, our contractors are also being asked, but we’re being vetted on that as a provider.”

Next, Ryan Parks, Director at Iron Mountain chimed in, with a different observation. “When you look at our core business, 96% of our customers today already look to us for things for security and compliance – those audits are core,” he shared. “But we are having to go out and change designs multiple times. From Phase I to Phase II, what they’re asking for on day 1 versus what they ask for on day 90 could be completely different. So it’s about having that flexibility and be able to change your designs. So being able to change quickly, and at scale, is really key.”

“At Equinix, we’ve actually retooled our entire business for hyperscale,” added Eric Bezek, Regional Director for North Carolina at Equinix. “We’ve rolled out our X-Scale business this year, which is focused on really driving a whole new market that sits adjacent to our 50+ major peering points. There’s only 59 major peering points in the world today, although thousands of places where people peer. It’s really coming down to how you’re connected. It’s all about the network. Since they want to be in our building, and we can’t accommodate that space, we partner with the Singapore Sovereign Wealth Fund, which is readily available. It’s driving so much demand that we recently did a billion dollar offer with them to build additional sites. So many folks in this room have helped us to be successful, and we really appreciate that.”

At that point, Moderator Robert Dennelly, Director of Engineering & PLM at AFL Hyperscale extended the discussion a bit more. “One of the things you have with hyperscalers is the amount of power and the cost of footprint requires something beyond a single building – more of a campus,” he shared. “For a colocation company, from a planning capacity, how are you guys looking at real estate to accommodate those hyperscalers?”

“We’ve seen exponential growth over the last 25 years. We anticipated what would have been a 35-40 megawatt campus and through redesign and engaging on the hyperscale front, the plan is now a 110-megawatt campus, over the next 5 years, if not sooner,” replied Parks. “I think that when you look at the price of land as an example in Loudoun County, which is $1.5 Million USD an acre, if not greater. But Prince William County is right around $300,000 USD an acre. As you continue to move southeast or southwest throughout the greater northern Virginia region, that’ where I think we’ll start to see everyone in this room looking at parcels.”

To conclude, Parks provided a prediction. “I can tell you that in the last 3 months, we’ve been proposed multiple 100-megawatt campuses all throughout the region. I think that trend will continue, expanding beyond Ashburn,” he forecast.

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