The Top Data Center Stories in 2018

by Michael Rareshide, on Jan 22, 2019 4:28:52 PM

Data center site selection in 2018 experienced “hyper” growth across the U.S. and the world.  Data center supply and demand continue to make quantum leaps in an effort to construct networks with the power and infrastructure to operate data-driven platforms in e-commerce, cloud services, artificial intelligence (AI), streaming services, gaming and social media. The top data center stories for 2018 include the following:

Hyperscale data center providers add significant capacity

Led by Facebook and Microsoft, the largest global technology companies have essentially implemented a “power grab” in 2018 for more and robust data center space. These two — along with Google, Amazon, Apple, Oracle and IBM — are leading the data center market in total megawatts (MWs) of capacity being taken down. 

They are accomplishing this goal with ground-up builds across multiple company-owned campuses across the U.S. and by leasing data center capacity with large powered shell and wholesale turnkey data center developers, such as CyrusOne, QTS, RagingWire, Digital Realty and CloudHQ. In just two transactions in 2018, Facebook leased almost 100 MWs of turnkey data center space in the Northern Virginia region. In this same submarket — the largest data center market in the world — Microsoft contracted for over 75 MWs of critical load with four third-party operators.

The amount of data center power being constructed represents a massive jump from even two years ago. It was newsworthy in 2016 if one hyperscale customer leased 10 MWs under one contract.In the hyperscale data center market, it appears that with the continued robust demand into 2019, the expectations are that a single turnkey data center lease will exceed 100 MWs.

M&A activity in the data center sector remains robust

With lots of investor money flowing into the data center category, there have been a handful of notable acquisitions during this calendar year including:

AT&T recently completed its sale of its colocation business to Brookfield infrastructure Partners for $1.1 billion. For AT&T, the company completed a similar exit strategy executed over the past two years by other major telecom corporations.  Verizon sold its enterprise colocation operations to Equinix), Windstream sold its enterprise colocation operations to TierPoint, and CenturyLink sold to private equity and renamed Cyxtera). Brookfield has renamed this AT&T colocation division as Evoque Data Center Solutions, which comprises 31 data centers across four continents and 11 countries.

The InfoMart Data Centers brand was sold off in two 2018 transactions. Equinix acquired the InfoMart in Dallas, one of the nation’s most iconic carrier hotels with over 1.6 million square feet, for $800 million. Equinix was the largest tenant in the InfoMart at 40 percent of total rents, so with its colocation operations in Dallas, a major Tier 1 market, this acquisition made perfect sense.

The remaining portion of InfoMart Data Centers, representing over 650,000 SF of data center space with development opportunities across three U.S. markets, was purchased by IPI Data Center Partners. IPI has just announced that they have combined these InfoMart assets with assets acquired from T5 Data Centers to be renamed STACK Infrastructure in a deal totaling over 1.5 million SF and 100 megawatts.

Liquid cooling grows as an important technology and becomes more mainstream

Close to half of a data center’s total energy use can go to keeping equipment properly cooled.   Only five years ago, power densities in data centers averaged 100-125 watts per square foot across the raised-floor environment. Now the power densities can typically exceed 200 watts per square foot, sometimes exceeding 500 watts per square foot in some portions of hyperscale facilities. AI and super-computing applications such as gaming, 3D graphics and Internet of Things (IoT) have spawned server equipment with a much higher cooling requirement. 

The individual racks that used to hold ~5 kilowatts of IT are being designed to handle up to 30 kilowatts per rack. The cooling fluid is either submerged or circulated within the computer server or its components to better remove the heat, which keeps up with these increasing power loads.

Cryptocurrency starts strong but finishes 2018 with a whimper

At the start of 2018 leading up from the last four months of 2017, prices for bitcoin, and other cryptocurrencies such as Ethereum and Ripple, traded as high as $17,000 per Bitcoin and made the mining of these digital currencies potentially very profitable.  Many new global players are jumping in the market to take advantage of this price hike. The only real requirements in mining cryptocurrency were cheap power in massive quantities and an ability to provide the heat rejection needed for the mining machines.

Starting in early June 2018 when prices began to drop, the ability to make a profit declined and reduced demand for new mining sites. By late 2018, bitcoin was trading in the ~$3,500-$4,000 range.


The 2018 US data center market surpassed all demand and supply records and remains on an upward spiral, so 2019 should be more of the same. By most industry estimates these mission critical networks — and the commensurate power and infrastructure required to operate them — still need additional capacity to meet consumer demands, so 2019 is expected to set demand and supply records. 


Topics:Economic DevelopmentData CenterSite Selection GroupSite Selection



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