North Carolina’s fast-growing data center industry is growing by another 120,000 square feet as Sentinel upfits another 120,000 square feet in its massive 420,000 square foot building. Despite ongoing technological changes in data housing – such as virtualization and cloud computing – North Carolina keeps gaining facilities and demand for service is growing. So what is going on? Sentinel’s co-founder sees several reasons and in an in-depth Q&A he explains why.
First, some backstory, and note this: IT spending actually decreased in 2015, according to research firm Gartner. Yet data center spend is growing.
Industry growth
“Data center systems’ spending is projected to reach $75 billion in 2016, a 3.0 percent increase from 2015,” Gartner reportedly recently. In 2015, IDC said growth was expected to total 26 percent.
The data explosion
The data that centers is expected to handle will increase to 8,622 exabytes in 2019 from 1,177 exabytes in 2012, according to Statista. (What’s an exabyte? Here’s Wikipedia’s definition: “The exabyte is a multiple of the unit byte for digital information. The prefix exa indicates multiplication by the sixth power of 1000 (1018) in the International System of Units (SI). Therefore, one exabyte is one quintillion bytes. The symbol for the exabyte is EB.”)
A growing number of players in N.C.
Google in Lenoir, Apple and Facebook in the west, IBM and other big providers in the Triangle plus Peak 10, Windstream and others are making the state a big home for these often mammoth, server-packed buildings. Sentinel came to North Carolina in 2012, pledging to fill its behemoth building. SAS and others have their own facilities.. Yet demand is such that 20 percent of the newly upfit space is already leased, according to Sentinel’s Todd Aaron. SAS and others have their own facilities.
Another 50,000 square feet of so-called “white space” (usable data center space) is also being made available. Sentinel is privately held. It’s based in New Jersey.
So what’s going on?
It’s not just exabytes.
There’s much more to the explosion than just the growing amount of data being created and the need to house as well as the computing power to analyze it, says Sentinel’s Todd Aaron. Among them:
- A data center’s ability to scale on demand for customers
- Increasing outsourcing of data services by enterprise clients
- Abundant and cheap power
- N.C.-passed legislation favorable to tax issues and power rates
Here’s our Q&A:
- Why is customer demand increasing for data storage space at a second party location?
At a macro level, demand is increasing for outsourced collocation as large enterprises increasingly move away from building and operating their own internal data centers. There are many factors informing this trend, among them:
1) ability to capture economies of scale only attainable via construction and operation of mega-scale facilities,
2) ability via models like ours for users to scale much more flexibly and on more of a “just in time” basis than via a self-owned and operated approach,
3) preservation of capital and ability to leverage more of a variable cost model where cost scales more perfectly with need,
4) increased recognition by large enterprises that constructing and operating best-in-class data centers is not necessarily a core competency.
- Are more virtual storage systems not impacting on data storage space and equipment demand?
Virtualization and “cloud” have allowed the typical large enterprise (our core customer) to deploy more efficiently than they may have five years ago, but they have also enabled new drivers of IT growth. In all cases, well run enterprises are deploying “hybrid” models in which substantial portions of their IT inventory (including storage, compute, network, etc.) are maintained on private infrastructure (including private clouds and virtualized infrastructure) in their owned or leased data centers and certain elements may leverage public clouds.
Separately, many “as a service” providers such as the “virtual storage” providers you reference above deploy infrastructure in data centers like ours… they can be our customers too.
Overall, the market for outsourced colocation is growing steadily and is forecast by the like of Gartner, etc to remain growing at healthy rates for the foreseeable future.
- With IBM having a big data center here, Google and Apple and Facebook in western NC and other providers in the region, how is Sentinel able to compete with such big providers – especially with so much media attention focused on Amazon Web Services and Microsoft Azure?
While these companies often build their own data centers, they also often leverage models like ours to deploy capacity as well. We do not compete with them in that they are providing cloud-based IT services… we simply provide facilities, power, cooling and bandwidth services.
As mentioned in the [earlier question], the typical enterprise may leverage cloud providers like this (and other more specialized clouds that may exist in data centers like ours) as one component of a “hybrid” strategy in which core, predictable, high-utilization or security-sensitive workloads remain on in-house private clouds or dedicated systems and certain less predictable, lower utilization or test-dev [testing, development] functions leverage public cloud players.
Further to the question above, we believe that the presence in North Carolina of the large technology firms that you’ve mentioned above validates the region and highlights many of the same benefits from which Sentinel’s users benefit, among them:
1) abundant and inexpensive utility power,
2) attractive state tax environment and data center-specific incentive statutes,
3) technology-oriented workforce and culture of innovation,
4) ease of access from multiple areas of the country,
5) relatively low cost of construction and facility operation, among others.
- Is the lower power rate something that gives Sentinel an advantage over other providers and/or makes it cheaper for companies to power their data centers thru you rather than their own facilities?
Yes. As we pass through power consumption to our users at cost, a lower power rate materially benefits our customers.
On a relative basis as compared to other providers in the region, our power rate is materially lower for three primary reasons:
1) By virtue of our size and the capital invested in our NC-1 facility, we are eligible for benefits afforded under the NC Datacenter Act, among them exemption from North Carolina’s 7% sales tax on electricity,
2) Our contract with Duke Energy affords us access to additional incentives that further reduce our base rates, and
3) we constructed and operate a dedicated on-site substation from which we receive redundant 100kV services.
This “transmission voltage” service enables our access to a different tariff structure than that utilized for typical distribution voltage services. This tariff structure, coupled with the high power loads and constant use profile that typifies mega-scale enterprise data centers, enables access to more attractive all-in pricing.
As compared to other locales nationally, our current rate of approximately $0.042/kwh compares very favorably and provides a very material total-cost-of-ownership advantage over historically popular data center hotbeds such as Northern Virginia and Dallas.
The new expansion details
- Is this newly built space or upfit within the existing structure?
This is an upfit of an incremental ~120,000 sf within the existing 420,000 sf shell.
- Is white space reserved for office space? Please explain
The white space refers to usable data center space. This Phase II expansion will yield five ~10,000 sf data halls that comprise the “white space.”
These data halls can be further subdivided into hard-walled suites of varying sizes to accommodate different use profiles.
The remaining area to built-out as part of this Phase II will house supporting mechanical and electrical equipment and ancillary administrative space (office, staging, storage, build/burn, etc.).
- How much of the new space of iis pre-leased?
Approximately 20% of Phase II has been pre-leased.
