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Aug 23Doug Smith

Data Center Boom, Part 2

Aug 23Doug Smith

In a recent blog entry, I talked about a Bisnow seminar I attended on the current boom in data centers. Where are such centers located, and what factors affect how location decisions are made?

It turns out, by the way, that Northern Virginia is right in the middle of this data center boom. There are currently 8 million square feet of data center space in Northern Virginia, with a vacancy rate of only 4.7%. This is much lower than the commercial real estate vacancy rate! A number of new data centers are under construction, particularly in the Ashburn area of Loudon County.

One of the key considerations in locating data centers is access to electrical power. Data centers use huge amounts of power to drive servers, storage devices, and cooling. One of the seminar speakers noted that data center providers will run out of power long before they run out of floor space (especially with Moore’s Law continued to shrink devices). Dominion Virginia Power (our local utility) has estimated that, in the next few years, 10% of all electrical power used in Virginia will go to data centers!

Hand-in-hand with the increasing need for power, of course, goes concerns about the impacts of power generation. Thus, there is a large emphasis on energy efficiency and “going green” as new data centers are built.

Another location consideration is network throughput. Video on demand (think Hulu, Netflix, and YouTube) not only requires a lot of storage, it also requires a lot of bandwidth. The quality and reliability of the bandwidth is also important. Thus, data centers should be located close to large fiber optic trunkways.

In some user sectors (e.g., Government, financial services, online commerce) reliability is extremely important. If there is a problem in one data center, services need to “fail over” to another center instantaneously, and copies of the data must be in both places so the user experience is not interrupted. Thus, companies may lease data center capacity in different areas of the country.

Not only is reliability important, so is security. Many organizations survive on their technology assets, and those cannot be put at risk. Data centers tend to be located in suburban areas rather than in urban areas, so they can be better protected.

Finally, latency (how fast data get in and out) is very important, especially for applications like online stock trading). When latency is a factor, interacting services need to be located close together.

Based on the size of the crowd at the seminar, this data center boom is likely to continue for quite some time. We’ll need to be on the watch for the data center “bubble” – we certainly saw the potential for overbuilding in the telecom boom of the late 1990s.

 

B2B CFO®

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