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JLL’s Conan Lee: Data Center in PNW Staying Strong, But Data Doesn’t Even Include Major Hyperscale Users

 
Nov 29, 2017
by Josh Anderson
Conan Lee, JLL

SEATTLE, WA — Jll’s Conan Lee had a little bit of local news for the crowd gathered at CapRE’s recent Seattle and Pacific Northwest Data Center Summit: the data center market in the Pacific Northwest is doing great. “It was a slow start, but last year, 2016, was a banner year for pretty much every operator in the region,” he began. “It slowed down for just a few reasons I will talk about, however it is back full on, up to speed, and it’s going to be a great rest of 2017. And 2018 is looking good too.”

As part of a keynote address titled State of the Data Center Industry, Current Demand Levels and the Evolving Types of Supply (Cloud vs Enterprise), Lee then delved into a high level overview of the most exciting deals and development in the Seattle, Washington, and the Pacific Northwest. “Isofusion – who does business as Colocation Northwest, I saw a couple of their guys here in the audience, they just leased up to 7 megawatts at a data center in Washington owned by Centaris,” he recalled. “It’s great to see that level of commitment.”

According to Lee, CyrusOne, one of the very large REITs in the data center sector, just made a large land acquisition in Quincy, with the intent to build a large 40 MW facility. “H5 data centers, I have got to hand it to those guys,” he then said. “They are a great data center operator that started its roots here in Seattle, and they are one of the few groups over the years that are currently building on speculation in downtown Seattle. Sabey is in Tukwila obviously and they build in speculation too, but H5 is really the only group that you’re seeing in a couple years that is building commissioned data center product on speculation and that’s great.”

QTS just announced that they acquired 75 acres of land in Hillsboro, said Lee, with the intent to build an approximately 50 megawatt facility. “Both Google and Microsoft really are doubling down,” he added. “Microsoft’s primary operation for hosting is in Quincy, and they have a 100 megawatt platform and growing. They are basically building to double that expectation. And Google is in a very similar situation, so they also have a similar footprint and its growing equally.”

One interesting thing note, said Lee, is that people such as himself in the finance and real estate world, don’t actually track and monitor things like Google and Microsoft, because they actually own all of their own product.  “So when you’re seeing data center trends and data center demand, it’s not taking into account all of these major hyperscale users,” he explained. “When that does occur, if you were to take that into account, and just look at the Pacific Northwest on power consumption alone, we’d be one of the largest data center markets in the world. As it stands, we’re the fifth largest in the country which is still very large nationally.”

Conan Lee is a Managing Director at JLL, where he provides real estate advisory and brokerage services to data center and office clients throughout the Pacific Northwest and North America. Conan specializes in all data center related practice lines including dispositions, acquisitions, and leasing. He runs the data center practice group for the Northwest and Western Canada and i​s the most active broker specializing in data centers in the Northwest from a marke​t share standpoint. His efforts and involvement in the local data center community have helped shape this quickly growing market over the last decade. The above snippet is just one part of this important keynote. Check out previous CapRE Insider Reports of this keynote address:

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