Data Center News | February 2022

Welcome to Harper Harrison’s Data Center News. A monthly release attempting to summarize some of the biggest news stories of the month along with some commentary of market trends. Operating across the USA, Europe and APAC within the Data Center sectors, our vast network across one of the fastest-growing industries provide valuable insight and data in which we believe help our clients achieve their growth goals. 

1st Edition - February Wrap Up 

Commentary 

What is evident from client activity and sheer volume or proposed construction projects, labour across 2022 particularly within construction and Engineering poses a major concern surrounding the timely delivery of programmes. This is particularly evident across North America and Europe. Rising inflation and cost of materials also compounds the challenges faced around project delivery times and budgets. Over the last 12 months, we have seen a steep increase in salaries. According to a report published by Willis Towers Watson, Construction salaries look set to increase by 3.6% during 2022. We believe that figure to be very conservative in reference to Data Centers due to the technical competences expected and required to deliver programmes to the desired standard. Harper Harrison data suggests salaries to rise by 7-8%. 

The pressure this puts on retention is also significant. We would expect to see higher than average attrition rates with some businesses bracing themselves for figures north of 20%. However, this isn’t a challenge purely isolated to construction. Development, Operations and Support functions (legal, HR, Finance) all have similar challenges. In terms of the areas with the highest demand we are experiencing, site acquisition and development instructions across both North America and Europe are up +40% compared to 2021. Construction and Engineering instructions are up over 30%. Harper Harrison have been advising a number of Colocation Providers, Funds and E&A firms on their North American and Global recruitment strategies to help navigate them through the challenges of 2022. 

North America news 

• According to reports and as reported by The Register, Apple plan it’s Data Centers with next generation storage and server hardware. In a move that will add further strain to the extremely high demand for Engineering Talent across the state of Texas, it will be interesting to see the plans afoot for these upgrades. 
• QTS is planning a new 800 acre Data Center development in Prince William County, North Virginia. The controversial development will create more than 1000 jobs over 2 decades with investment expected to be between $4-8bn 
• Iron Mountain has acquired IT asset disposal firm ITRenew in a bid to enhance it’s social and governance and environmental offerings provided to customers. 
• Harrison Street and American Real Estate partners have joined forces to launch a new Data Center business to be anchored in North Virginia. Whilst no name has officially been given to the new venture, two sites have been secured and $1bn committed for investment. Initial plans are to build six “powered shell” Data Centers totalling more than 2m square feet. (1) 
• Crypto Mining firm Hut 8 Mining Corp Canadian IT & Network company TeraGo for £30m. The deal has been agreed to purchase the cloud and colocation Data Center business totalling 5 Data Centers across Canada and includes over 36,000 Square feet spanning Vancouver through to Toronto. 
• Nothern Virginia has topped the global Data Center location list in a report published by Cushman & Wakefield. The report measures viability based on Land & Energy Costs, tax breaks and fiber connectivity and includes 8 USA regions out of the 10 listed. Despite it’s pause on Data Center projects, Singapore is joint second place with Hong kong & Sydney the only other cities outside of the USA in 6th & 8th place respectively.  Silicon Valley shares second place with Singapore followed by Atlanta and Chicago in joint 4th. Also featured are Phoenix, Dallas, Portland & Seattle. (2)
• Stack Infrastructure has recently completed work on it’s latest Data Center situated outside of Portland, Oregon. Pre-leasing activity means just 12MW of the first phase remains available of the 24MW 180,000 Sq Ft building. The campus once complete will provide 84MW over 30 acres and will be powered 100% by renewable energy. 
• Despite a concerted effort to move it’s IT to the cloud, JPMorgan spent over $2bn on Data Centers in 2021 and spend is expected to rise further in 2022. Chief Exec Jamie Dimon explained to analysts: “"We spent $2 billion on brand-new data centers, OK, which have all the cloud capability you can have in private data centers and stuff like that, We're still running the old data centers." 
• DataBanl has agreed to buy 4 Houston based Data Centers from CyrusOne for $670m. These represent the first sites for DataBank in the Houston area despite having several sites across Texas including Dallas, Austin and Waco. The moves comes as CyrusOne prepares for a reported $15bn acquisition by KKR and Global Infrastructure Partners. (3)

Europe news 

• Colt Data Centers has made the move to acquire 10 parcels of land in strategic hubs across Europe and Asia Pacific. London, Paris, GFrankfurt and one unnamed Japanese city are the locations of the sites. With 500 MVA in total across all sites, the move suits particularly large Data Centers. (4)
• There is continued debate on the future of Ireland’s Data Center stance. Whilst the Government has included Data Centers as part of it’s long term economic plan, recent reports suggest that the industry uses around 17% of all the power generated by Ireland. The debate comes on the back of the proposed $1.4bn planning proposal for the outskirts of Ennis submitted by Arts Data Centres Ltd. 
• A new Digital Valley site on the outskirts of Madrid has been proposed which is a 700-hectare, 360MW Data Center campus. 

Asia news 

• Huawei has deployed a modular Data Center Xi’an consisting of 5 stories and 938 cabinets with a construction time of 6 months. All equipment was pre-fabricated and pre-installed in an off-site factory reducing waste and dust by up to 80% and resulting in a material recovery rate of over 80%. Crucially, it reduced time of completion by over 10 months. 
• Singapore appears to have lifted its moratorium on New Data Center projects. Since 2019, new projects have been paused whilst the industry was under review. However, GanKim Yong, Minister for Trade and Industry recently revealed that future projects will be welcomed but “we intend to be more selective of which DC’s we can accommodate…… we seek to anchor best in class in terms of resource efficiency” 

Click on the below to read the full newsletter. 

VOLUME 2, ISSUE 1 (February 2022)