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Independent Data Center Alliance Members from DataGryd, maincubes, NYI and Colocation Northwest. 

PTC’20 was another terrific event in the books, complete with plenty of boisterous greetings, meetings and valuable conversations.  

Data centers were certainly a hot topic of conversation.  Just prior to everyone’s arrival in Honolulu, CyrusOne, one of the largest global data center providers, announced it is laying off 55 employees, or about 12 percent of its workforce.  Also, as PTC’20 began, Digital Realty announced that it closed on the sale of its Powered Base Building® portfolio to Mapletree Investments and Mapletree Industry Trust.  The 10 properties, which are fully leased, sold for $557 Million. 

One could wonder, what is happening in this space such that asset sales and layoffs are beginning to take shape?  The market is expanding and property owners and developers are beginning to reshape the way buyers approach the market.

This shift presents a great opportunity for smaller, single-site data center providers that offer quality personalized services in emerging markets.  Onsite at PTC’20 addressing this exact topic were Independent Data Center Alliance members Colocation Northwest, Datagryd, maincubes, and NYI.  Co-hosting an event with Bank Street, one of the industry’s leading investment banking and advisory firms, these companies gathered over 160 executives from across the industry at the lovely Halekulani Hau Terrace for networking and discussion about what is happening across the industry.

Along with the Independent Data Center Alliance, the Bank Street event was also supported by Schneider Electric, Competitive Telecoms Group (CTG) and InterGlobix Magazine and organized by iMiller Public Relations.  

Schneider Electric had its strongest presence yet at PTC’20 with 11 team members attending the conference — certainly a strong indication of the opportunities yet to be garnered in the data center space for them.  With its opening reception hosting 280 industry professionals on Saturday evening, CTG hosted executives and meetings at the Tapa Bar during the week, providing guidance and opportunities to companies that are challenged to meet the swift changes affecting workforce talent.  It’s hard not to recognize how digital transformation and related innovations are changing and reshaping our industry, creating stress when it comes to identifying, sourcing and retaining talent.

InterGlobix Magazine provided attendees of the Bank Street networking event the just-published copy of their exquisite magazine, featuring a cover story of Marc Ganzi titled ‘On the Road to $60B Digital Portfolio.’  Clearly, there’s one individual who is willing to take bets on the industry – inclusive of, but not limited to, data center investments.

Wells Fargo issued its report titled ‘Takeaways from PTC 2020: Partly Cloudy Forecast for Data Centers,’ touching upon some of the shifts taking place in the data center industry as well.  While their research focuses on the global REITs, they too saw some shifts in approaches. In summary, they were certain that hyperscale demand for data centers would pick up in 2020, but that the demand was unlikely to exceed 2018’s record numbers.  U.S. bookings for space were down in Q’4 2019 (with few exceptions), and competition in Northern Virginia remains fierce (note that STACK INFRASTRUCTURE announced its expansion in Prince William County, VA, with the development of a 125-acre hyperscale data center campus).  Wells Fargo continues to focus on the opportunities data centers have in international markets, feeling that there are more opportunities to be found there.  If it’s a global REIT you’re after, QTS and Digital Realty were their top picks based on information received at the event.

As a co-founder of the Independent Data Center Alliance, I participated in quite a few conversations with members, prospective members, supplier partners and service provider members.  I met with operators who are expanding, selling, implementing SDN solutions, creating communities of interested networks and more. The opportunities here continue to grow – even in the midst of contraction.  

So, what is this contraction all about?  My guess is that it’s a combination of a competitive market with emerging operators implementing differentiated, innovative opportunities along with economies of scale.  Once data centers are filled, the need for sales, engineering, partnership development support and other roles are no longer needed. Leveraging smarter innovations such as artificial intelligence and Software-Defined Networking in the data center also reduces the need for personnel. Furthermore, as consolidation takes shape, so too does redundancy.  

Speaking globally, some of the REITs can certainly deliver, but smaller operators often prove to be more nimble while providing services that go beyond space and power.  Smaller operators deliver experienced guidance and access to strong relationships and business growth opportunities. When coupled with these operators’ locations throughout North America and Europe, under-the-radar facilities prove that they can support any business need. It’s true: The independent players are certainly in the game.