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Silicon Valley Data Center Market

Special Report

Copyright © 2016, Data Center Frontier 2

Special RepoRtSilicon Valley Data Center Market

IntroductionThis report was prepared by Data Center Frontier, in conjunction with datacenterHawk.

Introduction................................................ 2About Data Center Frontier ........................... 2About datacenterHawk ................................ 2

Market Overview and Analysis .......................... 3The Silicon Valley Data Center Market is Poised for Growth ....................................... 3Background & History .................................. 4Market Position .......................................... 4Trends in Demand ....................................... 5Trends in Supply ......................................... 5

Business Environment .................................... 7Connectivity ............................................. 7Power ..................................................... 7Disaster Risk ............................................. 7Economic Development and Incentives .............. 7

Overview of Major Providers ............................ 8365 Data Centers ....................................... 8Central Colo ............................................. 9

CenturyLink ............................................. 9CoreSite .................................................. 9Digital Realty ..........................................10DuPont Fabros Technology ............................10Equinix ..................................................11H5 Data Centers .......................................11Infomart Data Centers ................................11Internap ................................................11QTS Realty Trust .......................................12Vantage Data Centers ................................12Verizon (Terremark) ...................................13vXchnge .................................................13

Customer Search Trends ................................13About Our Sponsor .......................................15

Vantage Data Centers .................................15Methodology ..............................................16

Methodology Example .................................16

Contents

ABoUT dATA cenTer fronTIer

http://datacenterfrontier.com

Data Center Frontier charts the future of data centers and cloud computing. We write about what’s next for the Internet, and the innovations that will take us there. The data center is our prism. We tell the story of the digital economy through the facilities that power the cloud and the people who build them. In writing about data centers and thought leaders, we explain the importance of how and where these facilities are built, how they are powered, and their impact on the Internet and the communities around them.

Data Center Frontier is edited by Rich Miller, the data center industry’s most experienced journalist. For more than 15 years, Rich has profi led the key role played by data centers in the Internet revolution.

ABoUT dATAcenTerhAwk

http://www.datacenterhawk.com

datacenterHawk is a convenient “one-stop-shop” for IT professionals, consultants, data center operators and investors to fi nd data center and cloud solutions. Our subscription-based service makes the complex process of searching and analyzing colocation and cloud service providers simple and faster than ever. Our online tools help users compare potential data center solutions using real-time capacity information, fi nancial data, and market research; then present the fi ndings in a sharp, easy to understand report.

For non-subscribers, datacenterHawk delivers hard to fi nd information on the top Internet exchanges, cloud computing providers, carrier hotels, and colocation facilities in North America on a per-report basis. With a credit card number, IT professionals can use datacenterHawk to reduce the time it takes to fi nd data center market information down from hours to seconds.



Market Overview and Analysis

Silicon Valley is America’s leading engine of business innovation. It is also one of largest and most important data center markets in the U.S., providing space for servers to deploy new hardware and services from the Valley’s marquee technology companies, as well as a legion of fast-moving startups.

Proximity to corporations and Internet consumers continues to be a key factor in where data centers are located. Silicon Valley provides one of the industry’s most compelling proximity stories. The region is home to America’s leading tech players, including Apple, Google, Facebook, Intel, Cisco, Oracle and many others. Its residents represent a huge base of tech-savvy consumers, who are consistently among the earliest adopters of new products and services.

That’s why Silicon Valley remains one of America’s busiest markets for data center space, despite a number of potential deterrents, including expensive land, comparatively high cost of power, and the risk of earthquakes.

The Silicon Valley area is home to nearly 2.6 million square feet (SF) of commissioned data center space, representing 343 megawatts (MW) of commis-sioned power, according to market research from datacenterHawk. That makes Silicon Valley the second-largest market for data center space in the U.S., trailing only Northern Virginia

Demand for space is strong, as reflected in the vacancy rate of just 8.2 percent in the region. The vacant space (approximately 26 MW) is scattered throughout retail colocation facilities in the Silicon Valley market. The wholesale market is very tight, with several operators working to deliver capacity.

Much of the activity in Silicon Valley is focused on Santa Clara, which boasts 34 data centers located in a three-and-a-half square mile area, rivaling “Data Center Alley” in Northern Virginia for the world’s largest concentration of data centers. Santa Clara has emerged as the Data Center Capital of Silicon Valley due to competitive power pricing from the municipal utility, Silicon Valley Power, whose rates are significantly lower than the cost of power from PG&E in surrounding towns, with the price difference ranging between 25 and 40 percent.

The SIlIcon VAlley dATA cenTer mArkeT IS poISed for growThLeasing was strong during 2015, with net absorption of 35 MW of space in 2015. The first half of 2016 has seen robust leasing, including multiple pre-leases for entire phases of new data center buildings while they are still in the construction phase.

This strong demand has paved the way for new construction, with Vantage Data Centers, Equinix and INFOMART Data Centers all planning expansions of their data center footprints in Silicon Valley.



BAckgroUnd & hISTory

Silicon Valley lies south of San Francisco extending roughly from Palo Alto southward to San Jose. It includes the Santa Clara Valley, which was once rich farmland but has emerged as fertile territory for technology innovation, including the silicon chips that gave the region its name.

In the 1990s, the Valley’s tech companies focused on the Internet, creating a need for data facilities to house servers for web sites and applications. Early activity was concentrated in multi-tenant “carrier hotels” that housed dozens of service providers and web sites, including the Palo Alto Internet Exchange (PAIX) and the Market Post Tower in Downtown San Jose.

The dot-com boom helped define a new industry of colocation providers and hosting companies, who began building their own data center facilities around Silicon Valley.

mArkeT poSITIon

Silicon Valley is the second-largest market for commissioned data center space in the U.S., trailing only Northern Virginia. Requirements typically originate from companies already located in the region, often representing the primary West Coast footprint for larger web infrastructures. In many cases, companies see data center space in

Silicon Valley as a strategic imperative that outweighs other factors, similar to the attraction of Manhattan or downtown Chicago.

Providers in Silicon Valley compete with several other markets. Hyperscale companies often weigh options in both Santa Clara and the Pacific Northwest, which offers cheaper land and power and a favorable climate for using outside air for cooling. It’s important to note that several cloud providers deploy capacity in both regions. Companies that are risk-sensitive may weigh options in Silicon Valley alongside providers in Phoenix or Las Vegas, which offer low disaster risk, or Sacramento, which offers a combination of lower earthquake risk and short driving time.

Here’s a look at datacenterHawk’s data on the data center capacity, both present and future, in major U.S. markets.

For each market, the orange bar reflects available capacity, dark blue is commissioned space, light blue is space under construction, and gray is for planned capacity. The first two bars in each grouping reflect capacity in power, while the second two represent space in square footage.

In terms of commissioned data center space (the dark blue bar), the top five markets are Northern Virginia, Silicon Valley, Dallas/Forth Worth, Northern New Jersey and Chicago.



TrendS In demAndIn recent months Santa Clara has seen a historic flurry of large leases:

▶ In early 2016, a single tenant pre-leased 16 MW of space from DuPont Fabros Technology, accounting for the entire third phase of the company’s data center in Santa Clara.

▶ In February, CoreSite signed a lease for the entire second phase of its SV7 data center in Santa Clara, representing 9 MW of space.

▶ Vantage Data Centers recently pre-leased the entire 6 MW V4 data center on its Santa Clara campus.

These deals affirm that Silicon Valley remains a favored destination for hyperscale cloud providers, who are scaling quickly, prompting them to lease wholesale space in Silicon Valley even as they continue to expand their company-built footprints in Oregon and Washington. Speed of deployment is a critical factor for these cloud providers, who are competing fiercely for market share and mindshare. Proximity to San Francisco is also important due to latency and performance factors in cloud service delivery to Bay Area enterprise customers.

Working with wholesale providers on large requirements—effectively build-to-suit deals—is often the most efficient way for these companies to meet their capacity needs. Amazon, Microsoft and Apple are all building their own space in the Pacific Northwest while leasing wholesale space in Santa Clara.

Cloud isn’t the only demand driver. Silicon Valley is a market of markets, with strong activity in both retail colocation and wholesale data center space. Tenants use data center space for a variety of purposes, including corporate IT, research labs and high-performance computing, as well as cloud deployments.

Many retail colo customers, including content companies and social media providers, seek interconnections and network-rich data center ecosystems. Equinix is the leading player in this niche, and operates seven data centers in Silicon Valley, including a large data center campus in

South San Jose. Digital Realty’s Telx unit also offers interconnection services from multiple facilities in the region.

The high cost of Silicon Valley real estate has recently been creating demand for data center space. Many companies are seeking to move server rooms and technology labs out of their headquarters, as the recent hiring boom has led to a shortage of office space on corporate campuses.

This has created several types of opportunities for data centers providers. Vantage has done multi-MW deals with several lab tenants for “variable resiliency” space, which support high-density workloads with a non-redundant (N) power configuration. Colovore, which targets high-density customers with colo cabinets featuring water-chilled rear doors, has seen demand from Valley companies whose in-house data centers could not support cloud deployments using converged hardware.

TrendS In SUpplyThere is currently a limited supply of data center space in Silicon Valley, which has prompted several companies to undertake construction projects to bring additional capacity online. These include:

▶ Vantage recently announced plans to build two new data centers on its Santa Clara campus. The first building, known as V6, is scheduled to come online next year. The total buildout for the two properties will be 21 MW. In addition, Vantage has secured land for a second major data center campus in Santa Clara, which is planned to house an additional 54 MW of IT capacity, with the first building likely to come online in 2018.

▶ Equinix has broken ground on SV10, a new data center on its South San Jose campus that will be built in three phases, offering 14 MW of capacity at completion. Equinix has plans to build another facility (SV11) on the property as SV10 nears capacity.

Tenants use data center space for a variety of purposes, including corporate IT, research labs and high-performance computing, as well as cloud deployments.

The high cost of Silicon Valley real estate has recently been creating demand for data center space. Many companies are seeking to move server rooms and technology labs out of their headquarters, as the recent hiring boom has led to a shortage of office space on corporate campuses.



▶ INFOMART has just announced a 6 MW expansion of its campus in San Jose (formerly Fortune Data Centers). The company will retrofit an existing building, and has land available for additional expansion.

▶ CoreSite has accelerated its construction schedule for SV7 in Santa Clara, which will bring 123,000 SF of space online later this year and into 2017.

At the close of the second quarter, there was 28 MW of capacity under construction in Silicon Valley, compared to 12.25 MW in the first quarter of 2016, according to datacenterHawk.

Although this number has doubled, construction volume in Silicon Valley trails far behind other major U.S. data center markets. Northern Virginia, Dallas/Fort Worth and Chicago all have in excess of 100 MWs of capacity currently under construction.

Since demand is strong, this appears to reflect the more disciplined approach to new construction in Silicon Valley.

That’s probably why wholesale providers have been reporting stronger pricing on their inventory in Silicon Valley. This has been seen most clearly in the public disclosures of return on invested capital for DuPont Fabros, which has risen by about 2 percent between 2013 and 2016.

As we noted in our discussion of demand, several recent deals have seen new supply leased up before it is built, prompting new construction announcements. Over the past several years, providers in the Silicon Valley market have been cautious about new construction and disciplined in their deployment of capital, building space in smaller increments. This is reflected in the construction activity in major markets, where Silicon Valley has a lower volume of active projects.

This is an important lesson of history. The supply of data center space in Silicon Valley has fluctuated over the years, including a building frenzy during

the dot-com boom that was followed by the bankruptcies of key players (notably Exodus, which built multiple data centers in Santa Clara).

In 2008-10 Santa Clara emerged as a significant market for wholesale data center space, with Facebook leasing large footprints from multiple providers in Silicon Valley. In 2011 the market got three new players as DuPont Fabros, Vantage and Server Farm Realty opened new data centers.

The market shifted in early 2013, absorbing new supply even as Facebook announced plans to sublease its third-party space in Silicon Valley and migrate capacity to its company-built data center in Oregon. The inventory of sub-leases and newly-built space took some time to digest, but ultimately demonstrated the resiliency of the Silicon Valley market.

While some providers are in expansion mode, others remain cautious about additional development in Silicon Valley, most notably QTS and Digital Realty.

Given the attractiveness of Silicon Valley, new players in the market are always a possibility. It’s worth noting that several data center players with national ambitions, Sabey Data Centers and CyrusOne, have no operations in Santa Clara. But Sabey has a substantial footprint in Washington state, where CyrusOne has recently acquired land for future build-to-suit projects.

Meanwhile, land availability is tight, and valuations on recent transactions in Santa Clara (such as Irvine Company’s purchase of a 32-acre AMD campus for a reported $175 million) are steep. It remains to be seen whether new entrants will emerge.

Over the past several years, providers in the Silicon Valley market have been cautious about new construction and disciplined in their deployment of capital, building space in smaller increments.

The market shifted in early 2013, absorbing new supply even as Facebook announced plans to sublease its third-party space in Silicon Valley and migrate capacity to its company-built data center in Oregon. The inventory of sub-leases and newly-built space took some time to digest, but ultimately demonstrated the resiliency of the Silicon Valley market.



Business EnvironmentconnecTIVITyLegacy carriers AT&T, Sprint, and Verizon all run long-haul fiber connections on the west side of San Francisco Bay. These fast connections to the Internet backbone link tech businesses from San Francisco in the north to the concentrations of data centers south of the Bay in Santa Clara and San Jose. Fiber from newer carriers CenturyLink, Cogent, Electric Lightwave, Integra, Level3, M Power, Paxio, Telepacific, XO Communications, and Zayo all follow similar paths but also add connections to east Bay Area-suburbs of Berkeley and Oakland in the north, out to the growing eastern suburbs of Dublin, Pleasanton, and Livermore (home of the famous Jet Propulsion Labs), and circle back southwest to link up to San Jose/Santa Clara. Northern California also has a half-dozen localized fiber providers servicing specific areas. Municipal fiber is available in Palo Alto, Sun Bruno (just south of San Francisco proper), and San Leandro while Wilcon serves the data center-heavy areas in Santa Clara and San Jose.

powerPower pricing is a meaningful competitive factor in Silicon Valley, where the average power costs range from 9 to 15 cents per kilowatt hour (kWh), signifi-cantly higher than competing data center markets.

Within the Silicon Valley market, Santa Clara has emerged as the prime location due to power pricing from the municipal utility, Silicon Valley Power, whose rates average 25 to 40 percent lower than the cost of power from PG&E in surrounding towns.

Silicon Valley Power’s base rate for large industrial customers is about 22 percent lower than the average for PG&E in surrounding towns. Santa Clara does not have a city user tax which means another 5 percent savings for customers compared to San Jose or 3 percent compared to Sunnyvale. In addition, Silicon Valley Power negotiates volume discounts with customers that use a large amount of power, but those rates are kept confidential.

One exception to the broader pricing trends is the INFOMART data center in San Jose, which qualifies for PG&E’s Direct Access program, which allows it to competitively source power directly from other electricity providers. INFOMART says it can offer power rates around 9 cents per kilowatt hour, compared to about 10 cents in Santa Clara and 13 to 15 cents per kWh in other PG&E service areas.

These costs often factor into the decisions for Northern California-based companies to locate in the Pacific Northwest, where the power cost for data center users is considerably cheaper, with markets like Quincy, Washington offering power for as little as 3 cents per kWh.

Northern California has a reliable and extensive electrical grid. Both Pacific Gas & Electric and Silicon Valley Power encourage using renewable power such as solar, wind, and the more exotic biomass solutions. However, these “green” power sources can often increase a data center’s total cost of ownership.

dISASTer rISkThe largest natural hazard threat in the Northern California market is earthquakes. According to the United States Geological Survey’s 2014 findings, Northern California market is in one of the areas most likely to be impacted by an earthquake. Because of this, data center users and providers have invested significant capital in building facilities designed to handle these seismic events.

Another challenge for the Northern California market is the availability of water. Many data centers need large amounts of water to cool their facilities, and the multi-year drought in California creates challenges for data center operators.

Newer facilities now use free-air cooling and rooftop DX cooling technologies. Although some media coverage has created a perception that data centers abuse Northern California’s limited resources, the data center industry as a whole worked hard even before California’s provincial water crisis to conserve and use water in environmentally-friendly ways. As far back as 2005, numerous data centers (including many in Northern California) received Leadership in Energy and Environmental Design (LEED) certifications designed to conserve both water and electricity.

economIc deVelopmenT And IncenTIVeSTax abatement opportunities are not currently available through the State of California. Brook Taylor, a spokesman for the California Governor’s Office of Business and Economic Development, told the Associated Press in 2015 that: “If anything, [data centers] are being built in spite of the fact that we don’t have specific tax credits or incentives for them.” Local tax abatement opportunities do exist in certain markets in Northern California.



Overview of Major Providers

365 dATA cenTerS

Headquartered in Emeryville, CA, 365 Data Centers is a carrier-neutral data center provider with locations in seventeen markets across the United States. Providing colocation, interconnection, and remote hands services to clients, the company gives users a 100% uptime SLA. As a key differentiator in the crowded carrier-neutral data center market, 365 Data Centers guarantees at least ten fiber provider options in each of their facilities. 365 Data Centers offers quick start colocation bundles, allowing users access to colocation services quickly, with loads from 2 kW-5 kW on a month-to-month term, but pricing plans are also available for 24-36 month terms.

365 Data Centers has one facility in the Northern California market. 534 Stockton Avenue is located in a mixed industrial/residential area within one

mile of San Jose International Airport. Built by Switch & Data, purchased by Equinix, and then sold to 365 Data Centers in 2012, the current owners are implementing several upgrades to the facility. The site is a 20,000 SF building with approximately 15,000 SF of data center space and 800 kW of commissioned power.

data center provider number of facilities

publicly Traded/ private

number of US markets

International market

presence

local presence

365 datacenters 1 private 11-15 no San Jose

centurylink 6 public 16-20 yes Santa clara Sunnyvale

digital realty 26 public 16-20 yesSanta clara, San Jose, San francisco, Sunnyvale, oakland

dupont fabros 1 public 1-5 no Santa clara

edgeconneX 1 private 21-25 yes Santa clara

equinix 10 public 11-15 yes Sunnyvale, San Jose, Santa clara, palo Alto

Infomart data centers 1 private 1-5 no San Jose

Internap 3 private 6-10 yes Santa clara San francisco

QTS 2 public 11-15 no Santa clara, San Jose

Server farm realty 1 private 1-5 no Santa clara

Vantage data centers 4 private 1-5 no Santa clara

vXchnge 1 private 11-15 no Santa clara

Silicon Valley Data Center Market At a Glance

As a key differentiator in the crowded carrier-neutral data center market, 365 Data Centers guarantees at least ten fiber provider options in each of their facilities.



cenTrAl colo

Founded in 2014 by industry veteran Arman Khalili, Central Colo offers retail and wholesale colocation services, supporting mission-critical loads with an emphasis on high-density requirements of 15kW to 25kW per cabinet. In August 2016, Central Colo received new investment from global private equity firm Safanad, which brought in Ken Parent as CEO.

Central Colo operates a 94,500 square foot carrier-neutral colocation facility at 1360 Kifer Road in Sunnyvale, which has 4 MW of available power, with the ability to add another 4 MW in three to six months. Connectivity providers include AT&T, Level 3, Cogent, Zayo and CenturyLink. Publicly-identified anchor customers include Baidu Research and Colocation America.

cenTUrylInk

CenturyLink is a global communications company that provides colocation, cloud, managed hosting, and network services to the market. Much of CenturyLink’s data center infrastructure is made up of legacy sites from Savvis, which CenturyLink purchased in 2011 for $2.5 billion. CenturyLink operates six data centers in the Northern California market. The SN1 data center, located at 1400 Kifer Road in Sunnyvale, CA has 6 MW of total utility power delivering densities of up to 150 W/SF. CenturyLink SN2 is located directly next door at 1320 Kifer Road, and as 2 MW of total utility power and similar densities. Both were former Savvis facilities.

To the east, CenturyLink’s SC4 and SC5 data centers are leased spaces in a Digital Realty-owned building located in Santa Clara. Located at 2401 Walsh Street, SC4 is a two story 167,000 SF building with 8 MW of total power capacity and provides power densities up to 150 W/SF. CenturyLink’s SC5 data center is directly next door at 2403 Walsh Street. The 105,000 SF, one-story building has 8 MW of total utility power and provides densities of up to 150 W/SF. Like their Sunnyvale counterparts, CenturyLink’s Santa Clara

data centers are configured for N+1 power and cooling infrastructure redundancy. 4650 Old Ironsides is the location of CenturyLink’s SC9 data center in Santa Clara, CA. The 124,000 SF building owned by Digital Realty has 10 MW of total utility power. CenturyLink SC9 leverages that power to deliver up to 150 W/SF densities on their data center floor. Directly next to this data center is 4700 Old Ironsides, CenturyLink’s SC10 data center, which is approximately 90,000 SF gross space.

In Q4 2015, CenturyLink announced they were pursuing buyers for their data center portfolio. The process is still underway, with plans to finalize in late Q3 or early Q4 of 2016.

coreSITe

CoreSite is a colocation provider headquartered in Denver, CO. With a location in eight different markets, CoreSite provides colocation and connectivity throughout the seventeen data centers in their portfolio. Their dense environment of network and cloud/ IT service providers give customers interconnection and peering opportunities throughout their facilities. CoreSite serves both small and large customer power requirements. In Northern California, CoreSite operates six data centers: four of which are clustered in Santa Clara.

Located at 55 South Market Street, CoreSite’s SV1 data center is a 15-story building in San Jose and has commissioned multiple data halls inside the over 309,000 SF interior. SV1 has direct access to CoreSite’s Open Cloud and Peering Exchange, a valuable connectivity resource. The building is LEED-certified and SSAE-16 compliant. The electrical and mechanical infrastructure is rated for N+1 redundancy. CoreSite SV2 in Milpitas is a single-story, 80,000 SF building located at 1656 McCarthy. With 38,000 SF of data center space, SV2 has commissioned approximately 3.8 MW of critical power.

CoreSite’s largest investment in Northern California is at their Santa Clara campus at 3001 Coronado. The data center campus will eventually contain five data centers. The campus is secured by exterior perimeter fencing and is directly adjacent to a 75 MW dedicated substation, with electricity provided by Silicon Valley Power. The campus has over fifteen on-net carriers, and is directly tied back to an additional 44 on-net carriers at 55 South Market Street.

Central Colo offers retail and wholesale colocation services, supporting mission-critical loads with an emphasis on high-density requirements of 15kW to 25kW per cabinet.



SV3, located at 2901 Coronado Drive, was the first data center constructed on CoreSite’s campus. The 55,000 SF building is home to a major technology company and is fully leased. SV4, located at 2972 Stender Way in Santa Clara, is a LEED Gold data center commissioned in Q3 2011. The two-story, 102,000 SF building contains three data halls with approximately 65,000 SF of data center space. The building is cooled with rooftop airside economization cooling units. SV5, located at 2900 Stender Way, is a 101,721 SF building delivered in Q4 2013. The building, offered as a powered shell, is fully leased.

In 2016, CoreSite delivered SV6, a 132,000 SF powered shell building, to tenant Amazon Web Services. CoreSite is under construction with SV7, a 230,000 SF facility located on CoreSite’s large Santa Clara campus. CoreSite anticipated 80,000 SF of commissioned data center space to be delivered in 2016. In Q2 2015, the company announced they had leased 35,000 SF of the facility to one end user. In Q1 2016, the company signed a transaction with another user that secured Phase II of SV7, taking down the 80,000 SF that was currently under development.

dIgITAl reAlTy

Digital Realty (DLR) is a real estate investment trust (REIT) and the largest wholesale data center provider in the world. The company has grown to over 130 locations across four continents after going public in 2004; leveraging economies of scale to measurably benefit customers. Digital Realty delivers colocation, powered shell, private suite, and custom data center solutions. In addition, Digital Realty is focused on delivering relevant services to their clients such as move-in ready racks and cabinets in certain locations. The company is also focused on providing services surrounding connectivity to the Internet and cloud providers at multiple locations.

In July 2015, Digital Realty acquired Telx, a New York-based company offering colocation, interconnection and access, for $1.89 billion. The Telx acquisition

expanded and expedited Digital Realty’s ability to provide integrated services for SMB-to-enterprise customers.

DLR’s largest concentration of data centers in Northern California is in Santa Clara, where it owns or operates 15 facilities.

The two Telx data centers DLR now owns in Santa Clara, SCL1 and SCL2, are strategically located on major fiber routes and power grids. Telx SCL1 at 1100 Space Park Drive in Santa delivers power densities of 125 W/SF. The SCL2 data center at 2820 Northwestern Parkway Clara is part of the Vantage Data Centers multi-tenant data center campus, and is configured for 2N and N+1 redundancies for the UPS and cooling, with N+1 redundancy for the standby generator.

dUponT fABroS Technology

DuPont Fabros Technology is a publicly-traded U.S. data center colocation provider headquartered in Northern Virginia. The company traditionally delivers large, wholesale colocation carrier neutral data centers to the market. In addition, DuPont typically leases their carrier neutral facilities to tenants in a triple-net lease structure, allowing the tenant to control operating expenses on a more direct basis.

DuPont Fabros delivered their 360,000 SF building (SC1) located in at 55 Reed Street in phases over a four-year period. The provider has fully leased the 36.2 MW of commissioned power and 173,000 of data center space (Phases I & II). DFT built multiple data halls in the facility to handle up to 2.275 MW and 11,000 SF of data center space each. Built on a 16-acre site and designed to LEED standards, SC1 was constructed in two identical phases, each with 18.2 MW of critical load. SC1 is a carrier-neutral, served by multiple fiber providers.

In Q1 2016, DuPont Fabros announced the pre-leasing of SC1 Phase III, a 16.0 mW and 64,000 SF lease of commissioned space. This is one of the largest colocation transactions to be completed in the data center industry. The lease is expected to commence in Q3 2017.

DuPont typically leases their carrier neutral facilities to tenants in a triple-net lease structure, allowing the tenant to control operating expenses on a more direct basis.

Digital Realty has grown to over 130 locations across four continents after going public in 2004; leveraging economies of scale to measurably benefit customers.



eQUInIX Equinix is a global data center company providing colocation, interconnection, and connectivity services to users. The California-based company has over 100 data centers in 33 markets throughout the world, and gives access to over 450+ cloud providers in their portfolio. Equinix operates their data centers under the International Business Exchange (IBX) product name.

Equinix pricing is typically higher due to the ecosystems created in Equinix facilities and access to cloud and connectivity services. In North America, Equinix revenues come from colocation and telecom interconnections while a mix of colocation and managed infrastructure services bring in more revenues for the rest of the world.

Equinix operates three data centers south of San Francisco in San Jose: SV1 is located at 11 Great Oaks Boulevard, SV3 is on 1735 Lundy Avenue, and SV5 is just down the street from SV1 at 9 Great Oaks. To the west in San Jose, Equinix SV2 is located in the tech-centric suburb of Santa Clara on 1350 Duane Avenue. In Sunnyvale, Equinix operates two data centers: SV4 at 255 Caspian Drive and SV6 at 444 Toyama Drive. Tucked away in Palo Alto is SV8 on 529 Bryant Street. All seven of Equinix’s data centers in the Northern California offer direct connections to both Amazon Web Services’ cloud and the Equinix Internet Exchange (IX), connecting peers in seventeen global metro areas over a single, resilient network.

In Q2 2016, Equinix purchased 11 acres in San Jose, CA, directly next to their site at Great Oaks Blvd. The site will hold SV10 and SV11, two additional data center facilities planned by Equinix. They are currently under construction with SV10 to deliver Phase I in Q1 2017, which will bring capacity to hold approximately 800 cabinets. The facility is planned to hold 2600 cabinets at full build out.

h5 dATA cenTerS H5 Data Centers is a colocation and wholesale data center provider with seven facilities in the United States. The privately-owned company designs data center and interconnection solutions for carriers, colocation, enterprise, and government customers. H5 San Jose is a purpose-built, 73,000 SF carrier-neutral data center with access to numerous fiber carriers. H5 offers this facility as either a wholesale data center space or as a powered shell with dedicated data center infrastructure.

InfomArT dATA cenTerS Infomart Data Centers was formed in 2014 by the merging of Fortune Data Centers and the Dallas Infomart, creating a data center colocation company with a national presence in some of the most competitive markets. Currently, Infomart Data Centers operate in Dallas, Portland, Silicon Valley, and Northern Virginia with certifications from both LEED and the Uptime Institute. Infomart’s RackReady concept, available in Portland and San Jose, allows growing data center users to explore larger data center deployments and while creating suites tailored to the customer. The service is available for users needing up to 1 MW.

The Infomart San Jose data center is the original “Fortune Data Center” location. The two-story building features 9.3 MW commissioned power and 41,000 SF of data center space. The space can be divided into multiple data halls. In Q2 2016, Infomart began construction on a new 6.0 MW addition to the building. The site has additional expansion options as well from both a space and power perspective.

InTernAp Internap is a colocation company headquartered in Atlanta, GA with a presence in 15 cities around the world. The company’s focus on the technology, healthcare, financial, online education, and gaming industries has propelled their growth over the last few years. In addition, Internap’s focus on low latency/high availability network services provide vertically-integrated services to their clients

Internap operates three data centers in Northern California to serve Silicon Valley businesses: Two in the Santa Clara cluster and one near downtown San Francisco. These three data centers offer colocation along with Internap’s OpenStack-based AgileCLOUD service. Internap markets the scalable, high-performance AgileCLOUD to the region’s numerous small-to-mid sized developers of software applications who demand agility and speed in a competitive industry.

Internap’s focus on the technology, healthcare, financial, online education, and gaming industries has propelled their growth over the last few years.



QTS reAlTy TrUST

QTS Realty Trust (QTS) is a publicly-traded real estate investment trust (REIT) with twelve data center properties in the continental United States. The company traditionally finds large, robust facilities and transforms them into LEED-certified data centers. QTS owns and operates a total of 2.1 million RFSF of data center space, of which 961,000 SF is rentable and 1.1 million SF is in development. Integrating real estate services with data center operational experience, QTS enables their mostly Fortune 1000 customers the opportunity to utilize the “3Cs” of custom data centers (C1), colocation (C2), and cloud services (C3). QTS delivers cloud services via outside vendors such as Alert Logic, who offers “security-as-a-service” for enterprises.

In May 2015, QTS acquired Carpathia Hosting, a competitor whose secure hybrid cloud solutions and VMware partnership enhanced QTS’ ability to serve government agencies. Due to the acquisition, QTS grew from twelve to 25 data centers. Carpathia also added more than 200 customers to the QTS portfolio and increased the employee base to more than 600.

QTS operates two fully-occupied data centers at 2805 and 2807 Mission College Boulevard in Santa Clara, provide approximately 55,000 RFSF of total data center space on a sprawling 135,000 SF campus. Both buildings receive dual-fed utility power from Silicon Valley Power substations with power and cooling infrastructure configured for N+1 redundancy. As of Q2 2016, both facilities were 100% leased.

VAnTAge dATA cenTerS

Vantage Data Centers is a U.S. colocation data center provider headquartered in Silicon Valley. Backed by Silver Lake Partners, the company designs and builds data centers to attract corporate users that need 250 kW or greater. Vantage has completed transactions with Fortune 100 and top Internet companies. They currently have four facilities in two markets.

Vantage operates three carrier-neutral data centers in Santa Clara built on their eighteen-acre campus. All four of the buildings on the Vantage Santa Clara campus, totaling over 330,000 SF, hold both SSAE-16 SOC 2 and LEED Platinum certifications to ensure data security and energy efficiency. Power to the buildings are served from two 50 MW dedicated on-site substations.

Each building on the Vantage Santa Clara campus is combination of both data center and premium office space. The V1 data center at 2820 Northwestern Parkway provides up to 20.5 MW of commissioned power and has limited availability. Vantage V2 is a 73,440 SF building with 60,000 SF total for colocation. V2 has a total capacity of 18MW (critical IT Load). The V3 facility has 6 MW of critical capacity and 40,000 SF of commissioned data center space.

In Q1 2016, Vantage announced the development of V4, a new two-story data center development that will sit directly next to V1 on the same campus. The entire 6 MW, 30,000 SF data center has already been fully leased to a single tenant.

Vantage recently announced plans to build two new data centers adjacent to its Santa Clara campus. The first building, known as V6, is scheduled to come online next year, with V5 to follow when additional capacity is needed. The total buildout for the two properties will be 21 MW. In addition, Vantage has secured land for a second major cloud campus in Santa Clara, which is planned to house an additional 54 MW of IT capacity, with the first building likely to come online in 2018. The expansions provide Vantage with up to 75 MW of future capacity in Santa Clara.

All four of the buildings on the Vantage Santa Clara campus hold both SSAE-16 SOC 2 and LEED Platinum certifications to ensure data security and energy efficiency.

Integrating real estate services with data center operational experience, QTS enables their mostly Fortune 1000 customers the opportunity to utilize the “3Cs” of custom data centers (C1), colocation (C2), and cloud services (C3).



VerIzon (TerremArk)

Verizon Data Centers is the infrastructure-centric arm of, Verizon, one of the world’s largest telecommunications firms. Verizon Data Centers delivers public, private and hybrid cloud solutions in various locations throughout the United States. The company purchased Terremark, a provider of managed and cloud services, in 2011 with intentions of competing heavily in the space. Since the acquisition, Verizon’s cloud business has grown to deliver cloud infrastructure, storage and tailored support tiers flexible for any workload.

The NAP West data center at 3030 Corvin in Santa Clara is Verizon/Terremark’s largest footprint in Silicon Valley. Verizon also maintains a point of presence at 2030 Fortune Drive in San Jose.

VXchnge

Created in 2013 when private equity firm Stephens Group bought the Bay Area Internet Services (BAIS), vXchnge is a national colocation provider. In May 2015, vXchnge bought eight Sungard AS data center facilities to expand their footprint into a total of fifteen U.S. markets. The acquisition is part of vXchnge’s strategy to create “Built for Performance” carrier-neutral data centers and address distance to customeror localization issues for the cloud and service providers that fuel the digital economy.

vXchnge’s 83,000 SF Santa Clara data center at 2050 Martin Avenue is a secure, carrier-neutral facility. The building receives 7 MW of dedicated utility power and all power/cooling infrastructure is configured for N+1 redundancy.

Customer Search TrendsSearch trends at datacenterHawk provide some insights into customer interest in the Silicon Valley data center market.



An overview of trends for customer searches on data center hawk shows that interest in the Silicon Valley market has been on the upswing in the first half of 2016.

A closer look at search trends shows an increase in searches for development sites (land) in Silicon Valley over the past two quarters, reflecting the need for companies to locate expansion sites for future data center capacity. In late 2015, users seeking space in Silicon Valley were primarily focused on colocation solutions, with little to no interest in development sites. Searches for cloud solutions were also higher in the second quarter of 2016.

Also data on average kW being sought by searchers (especially colocation searches).



About Our Sponsor

VAnTAge dATA cenTerS

www.vantagedatacenters.com

Vantage provides highly scalable, flexible and efficient data center solutions offering unique value through its commitment to exceptional customer service. Operating campuses in Silicon Valley, California, and Quincy, Washington, Vantage delivers data center design solutions engineered to meet our customers’ unique requirements in support of the most demanding large enterprises, technology companies and service providers.

Vantage operates four data centers in Santa Clara, totaling 45 MW of critical IT load, expandable to 126 MW. Our expertise brings you unparalleled reliability, performance and lower operating costs than other data center facilities in the area.



Methodology datacenterHawk continuously monitors data center development and activity in 35 regional North American markets. Regional markets are placed into one of two categories:

1. primary – Data center markets with larger number of colocation and cloud providers. These are in major cities with diverse business sectors and large economies

2. Secondary – Data center markets with smaller number of colocation and cloud providers. These are in midsized cities with small-to-medium economies

Primary and Secondary data center market sizes are defined based on the total amount of power and space in the market. The total amount of power and space in each market is calculated based on four key attributes:

1. The amount of commissioned power and space 2. The amount of available power and space 3. The amount of under construction power

and space 4. The amount of planned power and space

meThodology eXAmple

Data Center Provider A builds a 75,000 gross square foot data center, with three separate data halls of 1,200 kilowatts (kW) and 10,000 square feet (SF) of data center space each during a phased

construction. Data Center Provider A leases one of the three data halls (1,200 kW/10,000 SF) to a user and completes construction on the second data hall (1,200 kW/10,000 SF) to be ready for the next leasing opportunity. The third data hall is in shell condition and therefore considered “planned” space. The resulting datacenterHawk analysis of Data Center Provider A’s power and space capacity is shown in the graphic below.

In addition, the datacenterHawk analysis considers that many colocation and cloud providers lease infrastructure from larger data center providers. In datacenterHawk’s analysis, power, and space leased from one data center provider to another is counted only once. As an example, if the lease completed by Data Center Provider A in the scenario above was completed with Data Center Provider B with the intent to lease that 1,200 kW/10,000 SF of commissioned power and space to smaller customers, the analysis would only include the 1,200 kW of commissioned power and 10,000 SF of commissioned space one time.

These attributes in each market are tracked and refreshed on a quarterly basis throughout the year. Through the continuous monitoring of these components, a baseline is calculated for each market that is used to measure market growth and deliver the most current and valuable information needed.

datacenterHawk has made every attempt to ensure the accuracy and reliability of the information provided. However, the information is provided “as is” without warranty of any kind. datacenterHawk does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information provided.

Data Center Provider A – Capacity Overview

Available 1200 kw

commissioned 2400 kw

Under const. 0 Sf

planned 1200 kw

Available 10000 Sf

commissioned 20000 Sf

Under const. 0 Sf

planned 10000 SfSpace

power

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