RagingWire’s Jim Leach: The Modern Data Center Era is About Creating the Best Product — With Your Customers
by Josh Anderson
DALLAS, TX – The Texas data center arena isn’t as active as Ashburn, but it’s definitely got some moving parts. And that’s why CapRE’s recent Dallas data center summit featured a panel titled “Texas Data Center Market 360: The Rapid Growth of this Market, Impact of Hyperscale, Edge and Colocation’s Rebranding to Compete,” moderated by Arelis S. Soto, Marketing Manager for Data Centers at Corning.
“It’s amazing to me that 13 years ago, knowing where a data center was located was a mystery,” began Soto. “Going to a data center would have taken you three months to get into, especially if it was a financial institution. That being said, let’s start talking about what’s going on today. Please describe what’s changing the in the nature of supply, meaning, are we investing in more hyperscalers or are we investing more in colocation, multi-tenant, what’s going on?”
Tim Jordan, Managing Director at JLL was happy to offer a thoughtful response. “On the capital side we are seeing capital demand really across the spectrum,” he shared. “From hyperscale guys we are seeing demand there and we are having to change the products up a little bit on the hyperscale side. The enterprise user is still alive and well. And then you’ve got the colo side which is also alive and growing.”
According to Jordan, the great thing about the industry broadly is that we are seeing growth across the spectrum. “And the good news is that from a capital standpoint, we have more and more people coming into the business who have dedicated people, and who understand the space,” he added. “So that’s the hardest part of our job, to de-mistify the data center business, really, to lenders, and get them comfortable with what they’re financing in the infrastructure.”
“As we go through that discussion, the first time that we have the discussion or the fourth time, or maybe seven times, these are guys I’ve talked to for years about the business. And then all of a sudden, they call us back,” Jordan chuckled. “They want us to talk to their Chief Credit Officer and talk to them about the space, because now they want to be in the space. So it’s a long process. It’s a long game. But that’s where we’ve dedicated time and effort, to get people educated on the capital side.”
Next, James Leach, Vice President for Marketing at RagingWire Data Centers jumped into the conversation. “This is a really good question, to take a look at the supply of data centers,” he began. “Ragingwire was one of the early companies in the data enter industry. We were around back when Equinix wasn’t what it is now. There was a company called Exodus that everybody was talking about and probably some people in this room lost money on that.”
“So we’re a 20-year old company, and in the early days, the supply side of data centers was all about economics. It was basically an outsourcing argument – it was economies of scale,” recalled Leach. “You could provide a slice of a large data center to a customer at a better price than they could build themselves, and probably operate it better than they could. That was kind of Era 1. Era 2, I think, is what we’re coming out of right now, and that was about trying to build better mouse traps.”
“I bet that everybody that’s a provider in this room probably has a couple of patents that they talked about in that era,” Leach mused. “We sure did. We thought we could build a better data center than anyone else could and we were going to tell you about why that was better. I think that era is over now from a supply perspective. Now, it’s really our customers have become very educated. They’re very smart and they’re very collaborative in helping us build the right kind of data centers for them.”
Concluded Leach, “And that’s the era that we’re in now. It’s not about having a better mouse trap, it’s about having a product that is co-developed with our customers.”
For more coverage of this panel, check out an earlier CapRE Insider Report: TX Data Center Market 360: What’s Changing in Terms of Supply?