INVESTMENT ANALYSIS
By Michael Rareshide
BIG DATA , MAJOR DEMAND
Considering the continued growth of big tech , data centers will be a CRE sector to monitor .
When it comes to site selection for data centers , the hyperscale data center segment has developed into both the largest missioncritical real estate category and a key sector designed to meet the exponential demands of modern IT systems . As the name implies , “ hyper ” refers to ultra-fast computing while “ scale ” allows for the quick expansion of ever-growing networks .
The resulting speed-to-market ecosystem of data center technology , speed , and efficiency allows for millions of us as consumers to take for granted how quickly our phones and computers operate every day . Couple this framework with the dramatic outsourcing to the cloud by businesses — saving significant capital in the process — and the hyperscale market should expect significant growth globally for many years to come . While there is no standard definition of a hyperscale data center , the following will provide some of its importance to commercial real estate .
HOW BIG IS BIG FOR THESE HYPERSCALE DEVELOPMENTS ? Think about the massive million-plus-sf shipping and e-commerce logistics centers in the industrial sector of CRE . These same economies of scale can be applied to the hyperscale data center sector by firms like Facebook , Google , and Amazon Web Services . Many hyperscale developments can exceed 2 million sf and house thousands of servers in long rows of racks on raised floor environments that provide critical power and cooling to ensure maximum efficiency .
The critical power load for many of these hyperscale facilities easily surpasses 10 megawatts , and some
The resulting speed-to-market ecosystem of data center technology , speed , and efficiency allows consumers to take for granted how quickly our phones and computers operate every day . sites are designed to exceed 100 megawatts . Along with all the servers , sites have to provide substantial cooling , connectivity , and redundancy to ensure no downtime or disruption . If one megawatt can power roughly 750 residences , then a single data center can easily surpass the power needs of 75,000 homes .
As expected , the capital costs related to these massive data center campuses are breathtaking . One hyperscale data center campus can typically start at a $ 500 million budget for its initial phases , growing to over $ 1 billion in capital expenditures once fully developed . As an example , Facebook ’ s 2-million-sf campus is in its final phases and will exceed $ 1.5 billion in dedicated infrastructure — and the social media behemoth will have dozens more across the globe .
The global cloud and social media giants are the major customers and developers . Just three of them — Google , Amazon ( including AWS ) and Microsoft ( including Azure ) — comprise 50 percent of the total market . Other hubs of the internet — including Facebook , IBM , Oracle , and Apple — also have notable hyperscale infrastructure in place in the U . S . and globally . Alibaba , Twitter , and Baidu are also big players .
Here ’ s a look at the breadth of these projects across the U . S .:
• Google – Council Bluffs , Iowa : Since 2007 , Google has expanded this facility to over 2 million sf and over 100 megawatts power capacity , having invested more than $ 2.5 billion to date .
• Apple – Sparks , Nev .: This 100 percent renewable energy hyperscale site totals 1.08 million sf across three buildings on 1,700 acres , with a to-date price tag of $ 2 billion .
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE FALL 2021