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Posted: July 01, 2012

State of the state: Information Technology

Denver looks to partake in data center surge

Robert Lindsay

As the U.S. market for data center real estate has skyrocketed, the Denver area has been largely overlooked, in favor of larger corporate markets like Dallas and northern Virginia. But there are signs that Denver may soon become a major growth area for additional data center development.

"Interest in our area has definitely picked up in the last six months," says Laura Brandt, a manager for the Denver Economic Development Corp. "We are currently working with site selectors who represent data center companies and enterprise users that are evaluating our area. Over the next three years, I expect we will see more data center activity in our market."

Many factors make Denver a prime region for data center development. The area has a low propensity for natural disasters such as earthquakes, tornadoes and floods. It also has a highly educated labor force that allows companies to hire skilled technical workers.

Also, Denver’s mountain climate provides up to 8,000 hours of free, environmental cooling per year. Except in the hottest summer days, data centers can easily cool their facilities by pumping outside air into the building. This greatly offsets the need for massive amounts of power to electrically cool the facilities, and helps to provide a lower TCO for tenants.

"Data-center companies like the fact that they can fly in to the Denver International Airport in a couple of hours, from virtually anywhere in the country and view their infrastructure," Brandt says. "They also like that Denver has a single satellite bounce for data."

"The Denver region is an important North American fiber relay point," says Billie Haggard, senior vice president of Data Centers at CoreSite, a Denver-based data center company. "It features an IT-centric corporate presence as well as numerous large IT and telecommunications service providers."

Currently, the Denver area has about 2.9 million square feet of data center space. About 1.2 million square feet is operated by retail colocation companies, such as Denver-based ViaWest, Latisys and ForTrust. These operators typically lease cabinets and caged space to companies who wish to store their servers in a managed colocation environment. An additional 1 million square feet of data center space is owned or operated by private enterprise users, such as IBM, Lockheed Martin and TIAA-CREF.

The Denver market has one available data center that is designed for a single occupant. In Westminster, just off the Denver-Boulder turnpike, an empty data center stands commissioned and awaiting a tenant. The building is a highly secured facility with redundant power and cooling infrastructure designed to support and protect high-capacity servers and data storage equipment.

"The Westminster Data Center represents a unique opportunity for a single tenant data center user who wants to control and operate their own critical environment at a lower cost of occupancy," says Anthony Bolner, senior vice president of marketing for Stream Data Centers. "Currently, it’s the only available free-standing data center in the Denver region."

Stream Data Centers, a national owner and developer of data center space, purchased the Westminster Data Center from a major insurance company. The newly renovated facility has 10,000 square feet of raised floor space, and is fully commissioned for immediate deployment. The raised floor area and critical infrastructure is designed for easy expansion.

"Retail colocation companies and enterprise data centers have done very well in this market," says Pat Lynch, managing director of the Critical Environments Practice Group at CBRE in Denver. "I think we’ll also see additional wholesale and single-tenant product available in our area. Our competitive power cost and ideal climate makes the Rocky Mountain region a natural location to provide companies with redundant or secondary facilities for data backup and disaster recovery."

Data center space leases at high rates, and the presence of data centers increases opportunity for high-skill, high-paying jobs.

"We’re seeing a trend where many companies are less focused on having their IT infrastructure located in or near their corporate headquarters," Lynch says. "Instead, they’re focused on keeping their critical facilities in a safe and economically efficient operating environment. I think that bodes well for a market like Denver."

Robert Lindsay is a Seattle-based freelance business writer who often writes about the data center industry. He can be reached at lindsayrs@msn.com.

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