Where real estate intersects with technology
The importance of location to real estate is so profound, it’s usually thrice repeated. The opposite is true of our second world, the digital realm that overlays the physical, where one’s setting is mostly irrelevant. That’s why there is a growing need to merge the two, to find that place where property and technology can interface.
Serverfarm is one company looking to capitalize on this juncture. Ostensibly a real estate ownership company, the firm is internally organized to manage the critical infrastructure within its portfolio of data center colocation facilities as well as to execute new construction or redevelopment.
“If you hang around the digital world long enough, you’ll hear things like ‘software as a service,’ ‘infrastructure as a service,’ things that are sold as a service as opposed to a hard asset. And that’s where Serverfarm is going with the whole data center world,” said Mario Calderone, vice president, real estate at Serverfarm. “If we have a new customer and we need to add infrastructure to support that customer, we have the skillset internally to execute that build.”
The bleeding edge
In a November 2018 white paper by IDC, a Framingham, Massachusetts-based information technology research group, the growing worldwide need for data transfer was put into perspective. According to the paper, the “global datasphere will grow from 33 Zettabytes in 2018 to 175 Zettabytes by 2025.”
There are a couple terms there worth defining. The datasphere encompasses the creation and consumption of digital content with everything in between, including traditional and cloud data centers. A zettabyte, on the other hand, is equal to 1 trillion gigabytes, or in layman’s terms, a whole heck of a lot of data.
More data means more storage, and the IDC paper further foresees that approximately half of all the world’s stored data in 2025 will reside in public cloud environments. In other words, the rush to secure physical properties to offer colocation opportunities will only intensify in the next decade.
But those looking for data storage don’t just need capacity, they need proximity. Even as the volume and velocity of data rises, the efficiency of streaming that data goes down. Enter “edge” data centers, catering to organizations and users looking to get as near as possible to the point where data is generated.
“You want to get as close to the population base as you can, mainly for issues of latency and content distribution,” Calderone said. “Even though we are in the digital world, the further away you are, there is still some delay in transmission, so you want to get physically close.”
The Chicago edge
Serverfarm’s downtown Chicago facility is an excellent edge play. Located at 840 S. Canal Street, it’s a few blocks outside of the CBD. It’s also surrounded by burgeoning, data-heavy neighborhoods with Fulton Market to the north and the ascendant Medical District and South Loop to the west and east, respectively.
The multi-level, 134,000-square-foot data center space has 38MW of total power capacity. It also has good network connections, which is a crucial factor when looking at data center sites, and access to electrical utility capacity.
“Chicago happens to have an abundance of high-quality electrical capacity available off of its utility grid,” Calderone said. “The internet and digital network within the United States has a couple of different tiers, but one of the main hubs runs straight across the country and through Chicago.”
Serverfarm also manages a facility in Oak Brook which is more of a hybrid asset because it’s not technically a true data center. At 194,000 square feet, this colocation facility with its expansive floor plates is larger than the downtown property, but it offers 1.5MW total power.
“It has a huge amount of network that comes off of the interstate there and pops into our facility, so we have this odd mixture of quasi-data center network technology customers on the ground floor of that building and then traditional office space on the upper floors,” said Calderone.
Serverfarm’s Chicago operations comprise the firm’s largest single physical asset and as well as the largest single block of electrical capacity to sell. While some of their other locations are driven by customer demand, the company’s movement into Chicago was proactive, since they view it as a strategic market. Looking forward, the outlook is extremely positive for the colocation data center industry and Chicago’s place within it.
“The digital world is here and the world is not fully converted to it yet, believe it or not,” Calderone said. “The growth and utilization and the need for digital activity is exploding, so I think that places like our Chicago Canal Street facility currently do and will continue to play an ever increasing role in the digital transmission world.”