CAPRE’s NYC Data Center Summit Preview: Q&A with Digital Realty’s Jack Funchion

NEW YORK, NY — Jack Funchion is Director of Sales for the Northeast at Digital Realty. He has over 30 years of experience in the data center industry as an operations director, technology manager, management consultant and sales executive. For the past 10 years at Digital Realty, Jack has worked with senior level technology and real estate management at some of the world’s largest banking, insurance, communications, media, and technology services organizations. Jack has helped these companies identify solutions to data center capacity issues throughout North America, Europe and Asia. Jack will be a featured speaker at CAPRE’s Eighth Annual Greater New York Data Center & Cloud Infrastructure Summit. In advance of the event, we caught up with Jack to chat about his latest activity, and the most important issues his clients are calling him about.

Jack Funchion, Director of Sales – Northeast, Digital Realty

CAPRE: How has 2019 kicked off for Digital Realty?

Funchion: Overall 2019 has been very good. The New York / New Jersey market is quite good in particular. We’ve seen a significant increase in demand for scale deployments in New Jersey and the demand has stayed steady for the smaller deployments in the primary New York carrier hotels, such as 60 Hudson & 111 8th Avenue.

CAPRE: Do you anticipate that the tide will just keep rising?

Funchion: There is continuing steady demand for network access to the primary carrier buildings in New York City. It’s helped by the fact that Google, who is now the owner of 111 8th Avenue, have not renewed some leases for service providers, and they’ve had to move. So Google has taken some of the supply out of the market. Therefore demand continues and supply is still restricted. We’re seeing growth in New York City. In New Jersey, there hasn’t been steady demand in the last few years, but that’s changed recently. We’re seeing demand from financial services for large scale, 500 kilowatt requirements, up to 3-4 megawatt requirements there.

CAPRE: What kind of drivers are setting this pace? Why are financial services companies looking for capacity now?

Funchion: It’s pent up demand because no one had done anything for quite sometime. There are new players in the exchange arena too. there’s been demand from exchange operators, market data providers, and from international banks.

CAPRE: We’re looking forward to hearing from you at CAPRE’s upcoming New York City Data Center Summit. What is a hot topic you know people will be discussing?

Funchion: The biggest news is the significant uptick in demand for the New Jersey market. That’s the biggest piece of news in the New York City region related to the data center industry.

CAPRE: Got it. What else? How about on the tech side?

New SquareFunchion: I’d say, the continuing discussion about Edge requirements and the impact it’ll have on the market from non-financial services sources. Most demand in the New York metro for decades has been from the financial services industry. We’re going to see increased demand for capacity for non-financial services uses — related to Edge deployments, the Internet of Things, the 5G network roll out, etc. So that’ll be demand, basically, from a completely different sector.

CAPRE: What’s the best thing about doing business in New York & New Jersey?

Funchion: There’s not a whole lot of people building. So you don’t have to fight against the world to win a deal. We do a lot of business with companies based in New York City, but want data center capacity elsewhere in the world. So the financial services industry and their service providers continue to have off-the-charts demand. Just not a lot of it in the past 2 years has been specifically in the New York City/New Jersey marketplace. And that’s changed in the last year. The best thing about the marketplace in general is that the customer base is old, established companies, who have the wherewithal. They’re used to and comfortable with outsourcing data center infrastructure to companies like ours. So I don’t want to say it’s an easy sale, but it’s easier than it was ten years ago.

CAPRE: What could New York & New Jersey do better from a regulatory or business perspective?

Funchion: Lower electricity prices. That’s what could help. The regulatory environment is not very onerous in New Jersey. We don’t really have a problem adding capacity in New Jersey. It’s easy enough to acquire properties and get them entitled. It’s not like California. The key driver, which has driven a lot of New York-based companies to put data center capacity in Ashburn or Dallas, is the cost of power. I don’t know what can be done about that or what the utilities can do about it, but that will continue to be the case. There are multiple megawatts of Financial Services data center capacity in Ashburn or Dallas that are there because the cost of power there is half what it is in New York or New Jersey.

CAPRE: Finally, what is Digital Realty’s sweet spot? What do you bring to the data center arena that sets you apart from the rest?

Funchion: Digital Realty is a full-service provider. Whether you need a single cabinet or 10 megawatts, we can provide across the full spectrum. That’s fairly unique at this point. We’re also able to provide the same level of service, the same design, the same operational excellence, across the whole world. We’ve had a lot of success doing business with banks who have operations around London, Singapore, Frankfurt, etc. because we can do that.

CAPRE: Got it. Thanks for your time, Jack. We’ll see you in New York!