NEF’s CEO Michael Murphy and VP of Sales John Pomposello were recently invited to attend and participate in CBRE’s Data Center Solutions Annual Summit in Dallas. Taking place over 2 days, the agenda was filled with valuable meetings and talks, one of which being from the CIO of CBRE, whose aim was to talk about restructuring and agile development on CBRE’s part to keep up with a rapidly evolving industry. Another notable guest was Tim Huffman, who treated the summit to an acoustic performance at one of the scheduled happy hours. Aside from being a valuable member of the CBRE team, Tim is also a grammy-nominated song-writer and musician, and actually taught the great Zac Brown how to play guitar. The summit was comprised of a variety of panel discussions, with the aim of uncovering global data center trends and to shed light on where the market is headed.
The biggest continuous change that the data center industry is experiencing is the shift to hybrid environments, and the desire from customers to have access to customized solutions. Pure cost of services is not what is driving demand anymore, as it was in the past. Now, as hybrid environments grow in popularity, customers can afford to be pickier when it comes to selecting value-added services. It was also noted that prices are stabilizing in the market as a whole, but front-end transaction deals are decreasing in favor of expansions on original deals. To meet customer demand for customization, data centers are investing in high-density racks. This will allow them to handle a lot more activity within the same amount of physical space, which will let customers scale easily and quickly without having to make new arrangements.
Growth in Our Future
Despite the shift, investment in new data centers is not slowing down. In 2015, $6 billion was invested in data center construction globally, and so far in 2017 that number has jumped to $18.2 billion. Add to the fact that most analysts predict a continued 8% growth rate through 2021, and you can see that the industry has not even begun to reach its peak. There are similar trends in customer demand, as well. At the moment, there is 284 megawatts of data center under construction. In the U.S. alone, 45-65% of data center space is leased before construction, from a variety of domestic and international customers. A great example of this is in Northern Virginia, one of the hottest markets in the country, which already has 67% of its planned data center construction leased.
Michael Murphy sat on a panel that discussed network strategies, with the aim of detailing the importance that network and connectivity play in enterprise, third party, and hybrid environments. One of the important topics of discussion was the relevance of carrier hotels in the near future, and there was some interesting insight from all members of the panel on how this faction of the industry will fare as the overall environment evolves.
Mike made the point that, while carrier hotels may be the epicenter of connection now, the vast amount of data and distributed content that we are producing and needing for business is only growing and there will be a point where this model won’t be enough anymore. Representatives from Cologix and Coresite – also seated on the panel – relented that the model will have to be changed, but maintained that carrier hotels will always be a piece of the puzzle, even if they are closer to the edge of connection paths than the center.
As the industry progresses into the expansion of hybrid environments, it is extremely important to know your workloads and the environment that you are coming from so that you can know what kind of environment you need. Unfortunately, there is no one-size fits all service provider. Since most companies don’t have resources to independently evaluate their options, and getting information directly from the service providers can result in biased information, leveraging a neutral third party subject matter expert can help ensure you maximize efficiency and minimize cost. Understanding that no two customers are the same, NEF considers all criteria to make appropriate recommendations for our clients: staff, budget, time-frame, business units, and location of customers. To start a conversation with our team about data centers or hybrid environments, please contact us.
Network Strategies panel – from left to right: Moderator Jeremy Meyers of CBRE, Mike Murphy of NEF, Wayne Dietrich of Cologix, and Ben Green of CoreSite
Tim Huffman and Brant Burnett – both of CBRE – performed together at the cocktail reception
NEF’s John Pomposello with Mike Murphy and CBRE’s Matt Dickson