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Southwest Data Center Summit: Alan Kierman says Arizona Market Poised for Strong Growth

 
Nov 2, 2017
by Josh Anderson

PHOENIX, AZ – Founded in 2007, IO provides the data center as a service @scale™. IO internet data centers are engineered to deliver the optimal data center capacity, security, network and cloud inter-connectivity for mission critical applications of any scale.  IO operates large data center campuses, featuring over 2 million square feet, hundreds of networks and 300 MWs in North America and Singapore. For more than a decade, IO has earned the trust of the most demanding technology users by delivering the data center at scale to digital-first enterprises, cloud companies, hyperscale service providers, governments and businesses worldwide. To learn more about IO @scale™, visit io.com. Alan Kierman serves as SVP, Finance & Administration to IO. A featured speaker at today’s Southwest Data Center Summit, we caught up with him to hear his thoughts on the Phoenix and Southwest data center arenas, as well as what he is most looking forward to at today’s summit.

Alan Kierman, SVP, IO

CapRE: So what’s on your plate right now at IO? What’s on your mind?

Kierman: At this point in time, obviously we are extremely excited about our expansion parcel in Phoenix, which we acquired a short time ago. We are planning to develop between 400,000 and 600,000 square feet, and between 40-60 megawatts. We have gone through the entitlement process and development agreement with the city and are looking forward to proceeding with development. IO also operates large data center campuses—featuring over 2 million square feet, hundreds of networks and 300 MWs in North America and Singapore—and we are actively pursuing opportunities in key data center markets around the country for acquisition and ground-up development. We are constantly evaluating the trends, relating to customer acquisition, M&A, and access to debt and equity capital in the data center market. We continue to capitalize on those where we can, as well. So there is a lot going on the transactional front.

CapRE: And how do you see this all playing out Phoenix, Arizona, and/or the Southwest specifically?

Kierman: The Arizona market is poised for strong growth and we are taking advantage of that to double our footprint in coming years. We feel very bullish about the market overall. There are some key natural demand drivers, and California is going to continue to drive loads to Arizona. Arizona’s lack of natural disasters, power quality and cost, lower wages, and incentive package make it a good place for data centers to do business. All of the predictions out there – not just ours, but also third party brokers and other research analysts – are indicating the same. We feel good about it. In particular, we feel that the market incumbents are in a position to do very well. And we are taking advantage of that.

CapRE: So are there challenges out there facing your region that you’re keeping an eye on or perhaps thinking about how to address?

Kierman: Generally in Arizona, we want to make sure that our regulated utility market provides access to renewable energy at market prices, which is clearly a focus of our large and web-scale companies, which is becoming an increasingly large percentage of the marketplace. I do feel pretty good overall though about the headwinds in Arizona.

CapRE: And what are you most looking forward to about our event today?

Kierman: We are looking forward to having an event which is just focused on the Southwest. A lot of events out there are obviously national, so getting together with some of the local players, to talk about the issues affecting Arizona and the surrounding marketplace is always an exciting opportunity for us. IO started in Arizona. We continue to do well here and we are looking forward to expanding and growing our platform here.

CapRE: So what makes the Arizona market special as we look to the future?

Kierman: Well what is happening with the data center market is that it’s becoming concentrated in a couple of the large cities. Ashburn, Chicago, Dallas and Arizona have become a proxy for California and all of the exciting things that California has done for tech. The internet used to exist in probably 30 cities, but we think that a shrinking number of cities will be positioned well in the data center market going forward. Because of latency, the cost of network nodes and infrastructure, people are able to serve the nation globally from a smaller number of cities. We think Phoenix will be on that map. We are investing heavily and we think IO could be positioned to be one of the winners in the internet and cloud wars.

CapRE: We’d love to hear more of your thought on the internet and cloud wars.

Kierman: It is clear who the top 3-5 leaders are in the cloud space, and those guys are going to continue to deploy more capacity combined than the rest of the market. We think that being able to address the needs of those customers is extraordinarily important. Look at the recent M&A trends — wholesale transactions are trading at higher multiples than retail transactions. This is reflective of the importance of the web-scale customers, and that those players that can attract and service them are those that will continue to be positioned for success in the future. IO has a track record of successfully addressing the needs of the most demanding customers with data center as a service @scale™. Our internet data centers are engineered to deliver the optimal data center capacity, security, network and cloud inter-connectivity for mission critical applications of any scale.

CapRE: And what is the bottom line for IO right now?

Kierman: The key for IO is to be able to continue to attract both high end customers in the cloud space, and provide exceptional customer service to them and all the markets that they want to be in, so that we can leverage our platform. But at the same time we need to attract the right capital stack and structure to be able to grow as a private company, which is extremely important to us.

CapRE: Of course, makes sense. Thanks for your time today.

Alan Kierman serves as SVP, Finance & Administration to IO. He is responsible for the finance, accounting, tax and treasury functions, as well as directing strategic transactions, including debt and equity capitalization, and real estate acquisitions. Mr. Kierman is a 15+ year veteran of the real estate industry, most recently serving as IO’s Deputy General Counsel. Prior to joining IO, he practiced law in New York City and Phoenix, Arizona at international and boutique law firms. He counseled institutional and private clients in the acquisition, development and financing of complex real estate investments. Mr. Kierman has served as a board member of several area non-profit and for-profit organizations. He holds a Juris Doctor from Hofstra University School of Law and a Bachelor of Arts in Politics from Brandeis University, where he graduated with honors.

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