Seattle Data Center Preview: H5’s Rabin Mahanty says Seattle is Still Niche Market, “Going Denser” Trend may be Overblown
by Josh Anderson
DENVER, CO — Rabin Mahanty is a Director of Sales at H5 Data Centers. Mr. Mahanty is responsible for corporate growth through new client acquisition, business development, and marketing. Since 2001, Mr. Mahanty has worked in telecommunications and IT sales, sales management and business development, including working in the trenches through the explosion of mobile communications and “machine to machine” wireless technology. At H5 Data Centers, Mr. Mahanty specializes in delivering private suite and build-to-suit solutions to major enterprises and cloud service providers. Denver-based Mahanty is a frequent CapRE Data Center Summit panelist at west coast events, and in advance of CapRE’s upcoming Third Annual Greater Seattle & Pacific Northwest Data Center Summit November 15-16, we connected with Mahanty about what he is seeing in the Seattle and Pacific Northwest data center arenas.
CapRE: Thanks for chatting with us today. We know you’re based in Denver but we’ve also got a great interest in your activity in the Pacific Northwest. Please tell us what you’ve been seeing in that region lately.
Mahanty: Well, we own a dc right by the Needle downtown. We just added 10,000 square feet of space. We are seeing good activity. But Seattle is a little different than other markets like Dallas or Denver or what have you.
CapRE: And why’s that?
Mahanty: Typically, what you see in Seattle is that you don’t see wholesale or “large takedown” of space from a lot of the usual suspects like you do in other markets. You’re seeing the need for other, smaller deployments though, like thanks to the sub-sea cables from Everett and into downtown – it’s a big connection point to Asia. That word “smaller” is all relative though. You’re seeing smaller deals than you are seeing in Phoenix in Dallas, which have multi-megawatt deals.
CapRE: Please tell us more about those deals and deployments.
Mahanty: What people do is put some of their real estate in downtown Seattle and then tether it to Bellevue or Tukwila or other suburban centers. Puyallup is also a big suburban area. They’re so big for a few reasons though Seattle is very expensive in terms of square feet real estate and there are not a lot of large offerings in terms of space and power. And people need to be near the major internet exchange, which is at the Westin building. So that’s what they’re doing.
CapRE: Ah, interesting. We’d love to hear more about how Seattle and Washington compare to other regions.
Mahanty: Washington is still a much smaller market as compared to Arizona, Nevada, Dallas, or Denver. Where there is a lot of corporate-owned space is out in Quincy WA. What we are seeing is a lot of companies based in Seattle looking for data center space there. We’re seeing a lot of companies who want to inter-connect with Seattle providers, whether domestic or global. And hyperscale users like Microsoft, Oracle, Twitter, OVH, Facebook, you name it, a lot of them are upgrading their Telco backbones. So we are seeing what would be considered a much smaller scale deployment for Amazon or Facebook, but is really just a ramp to the cloud that needs to be at an Edge facility like the Westin or H5 center. Seattle is still kind of niche. Considering how many Fortune 50 companies are based there and the majority being tech firms, I think it’s a surprisingly small data center market, until you get out to Quincy.
CapRE: What’s the most exciting thing about Seattle right now?
Mahanty: There is obviously the massive sprawl growth of amazon. From the employee head count to office space to spiking rent and real estate prices, there’s growth. In the data center space and telco space however, you’re not seeing a huge influx right now. Some might disagree, but I think the big story is the Amazon growth. It maybe only relates to some data center growth, but it’s not really driving large companies who need to put massive information here. Maybe it could in the future, for some reason, if Amazon buys more product companies, for example, but then they would also distribute their data center needs nationally. I think it’s still a Tier II data center market, but a Tier I tech market. Seattle is only a little bigger than Denver but as far as global technology cities, it’s definitely a Tier I market. It’s almost a mecca behind the Bay Area, and growing.
CapRE: And what challenges exist to getting ahead in the Seattle data center arena? I’d also love to hear you thoughts on that same question nationally.
Mahanty: With regards to Seattle, it’s about the availability of real estate. The cost to develop new real estate in downtown Seattle and just the actual, physical, day to day work in downtown Seattle within a traffic perspective is challenging. A lot of people are delayed on build outs because of city permitting.
Nationally, I think that density — “going denser” — is a kind of a buzz word right now in our industry. You talk to a lot of IT directors, they will say they need to ramp up, their data center space need to be much denser. But when you look at what they are actually using, not many are actually getting that more dense. Some are definitely getting there, but not to the degree of what they’re getting sold on. I mean if look at research for things like the military or the human genome, then yeah you’re running 30-40 kilowatts per rack, but right now these buzz words are influencing decision-makers even if they don’t need it as compared to what they are actually deploying or needing. Some of that comes down to salesmanship on the part of hardware vendors. It’s definitely a trend that’s true but it’s a little exaggerated, unless you’re in specific verticals where very dense colocation has existed for a very long time.
CapRE: Fascinating. And is there anything else on your mind regarding challenges?
Mahanty: I would say that a challenge is PUE. With data centers these days, one big provider in Arizona and Dallas might say, hey we’ll charge 1.15 PUE. Another will say, well we charge 1.4 or 1.3. But it’s a very vague metric. I think monster companies that do large data center take downs understand this and know how to weed through the variances, however, I believe mid-market companies can get confused or are getting misled by this and what really equals “a better price.” A lower number looks good, but it may not be apples to apples with someone giving you a higher number but including more. So I think there should be a standardized way to just say, this is how we do it.
CapRE: We couldn’t agree more. This has been wonderful, thank you for your time. We’re sorry we won’t see you in Seattle this year, but we hope to see you soon.