Data Centers See No Clouds Ahead

Matt VanderZanden, Chief Strategy Officer, Stack Infrastructure. Image courtesy of Stack Infrastructure

Since March, the digital landscape has been undergoing an accelerated transformation, fueled by the ongoing pandemic. Society has become more reliant on online services, thus creating a stronger demand for data center space. In response, data center companies have taken steps that changed the direction and course of their growth, while at the same time ensuring the world stays connected.

Upgrading an existing structure to meet heightened technology demands is no longer sufficient. That’s what Stack Infrastructure had in mind when it tore down an operational facility in one of the busiest tech markets in the nation. In an interview with Commercial Property Executive, chief strategy officer Matt VanderZanden discusses the company’s decision and the thought process behind it. He also talks about innovation in supply-limited markets.

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What led Stack Infrastructure to tear down an operational facility in Silicon Valley, one of the busiest tech markets in the U.S.?

VanderZanden: The facility we tore down wasn’t able to deliver on the promises of our business—that we’re built to serve the needs of the world’s most innovative companies. It’s critical to support those clients with the solutions they need to grow securely, reliably and with competitive advantage. This took more than just a hardware refresh—it took a complete rebuild of our soon-to-be new SVY02 facility.

Tell us more about the new facility taking shape.

VanderZanden: At 32MW and 240,000 square feet over three stories, the new facility is going to be built to many of the specifications of our basis of design and the needs of our clients who will be occupying it. Every STACK data center is designed with operational efficiency in mind, ready to go on day one by any operations team from any background. That’s why we choose some enduring technologies and approaches that these clients will immediately recognize and will be able to use. 

How do you innovate in a dense data center market where there is little room to expand?

VanderZanden: Our clients come to us with such technical challenges all the time. That’s where we truly thrive. Many of our facilities are already in dense population zones, so this challenge isn’t new to us. As our business continues to grow, we have learned how to build efficiently in a limited footprint. It’s really about maintaining efficient and available power, cooling and redundancy and then working with clients to understand what they need in terms of density. 

According to Cloudflare, internet traffic decreased in most major cities and increased in the suburbs, due to work-from-home policies. What does this mean for the data center world?

VanderZanden: We’ve seen an overwhelming net increase in capacity demand from the hyperscale market since the pandemic began. There’s more utilization coming from everywhere. For us, it’s about having the available capacity to support critical population zones in a big way, all over the country.

We do see a lot of compute demand moving to the edge, which means our overall roadmap will include both top-tier and secondary markets in the future in order to bring capacity closer to submarkets. Broadly, there may be increased infrastructure build-out in the suburbs, but all of that traffic needs to be aggregated for storage, processing and transmission to a user base everywhere. We need to be as close as we can to as many users—or population zones—as possible.

Can the subsector handle the increased remote working and spikes in internet traffic caused by the pandemic?

VanderZanden: The data center world is more than capable of handling spikes in demand. Our systems of redundancy are rock-solid and we’re prepared to help our clients grow, and allow them to handle this increased demand. It takes a little bit of planning on their end, but we’ve got plenty of space to accommodate the flex. 

Tell us about your plans to build a 4 million-square-foot data center campus in Northern Virginia that will target the hyperscale cloud market. How is this project going?

VanderZanden: This project is advancing better than any of us at the company had ever dreamed of. Northern Virginia is a constrained market with enduring demand. In many cases, we’ve found ourselves oversubscribed on available opportunities.

I believe the pandemic has supported strong growth in the hyperscale cloud market—enough to overcome any contraction in enterprise colocation markets, so Northern Virginia is still a great market for large-scale deployments. We’ve just got to move fast!

What are some emerging markets data center investors should keep an eye on moving forward?

VanderZanden: We consistently keep an eye on the existing big data center markets in the U.S. such as Northern Virginia, Silicon Valley and Chicago. We also like the look of emerging markets such as New Albany, Ohio (a suburb of Columbus) and Atlanta. There is a lot of froth in these markets surrounding the headquarters of major Fortune 500 companies in these areas. And we always keep our eye on additional expansion opportunities elsewhere in North America—there’s a lot to be excited about in Canada and Mexico!

How do you expect the data center market to evolve?

VanderZanden: The data center market is a rock-solid aspect of commercial real estate. We’ve got a lot of work ahead of us in building larger-scale deployments, enhancing our focus on renewable energy and constantly optimizing our speed-to-market, but the future looks bright.

Digital experiences, digital business, telework, technology investment, venture capital—all of these together support a forecast of strong acceleration in this sector. It’s actually outpacing my own personal expectations for this year, so I see a solid track record of growth for the future!