Phoenix leads the pack as top destination for data centers

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A new report found that Phoenix’s data center market is growing steadily, and could become one of the top data center destinations in the U.S.

The real estate company CBRE’s report on data center trends looked at different driving forces investors took into account when choosing a location for data centers. According to Luke Denmon, senior associate at CBRE, Phoenix’s appeal is in its dry, arid climate, lack of natural disasters and laws that welcome emerging technologies.

>> Ted Simons: A NEW REPORT BY THE REAL
ESTATE FIRM CBRE FINDS THAT THE
PHOENIX AREA IS BECOMING A
LEADER IN THE DATA-CENTER
MARKET.
HERE TO EXPLAIN WHAT A
DATA-CENTER IS AND WHY WE'RE
SEEING SO MANY IN THE VALLEY, IS
CBRE'S LUKE DENMON.
GOOD TO HAVE YOU HERE.
WELCOME TO "ARIZONA HORIZON."
>> Luke Denmon: GOOD TO BE HERE.
>> Ted Simons: WHAT IS A DATACENTER AND
DESCRIBE THE MARKET?
>> Luke Denmon: IT MAKES THE INTERNET WORK
WHEN COMBINED WITH OTHER
DATACENTERS.
THE INTERNET IS A NETWORK OF NETWORKS.
IT’S A LARGE INDUSTRIAL SHELL THAT
HAS A LOT OF ELECTRICAL
DISTRIBUTION INSIDE IT AS WELL
AS AIR CONDITIONING.
IT ALLOWS THE INTERNET TO RUN AT
ALL TIMES 24-7 A WEEK.
THE BUILDING IS SET UP TO
SUPPORT RACKS AND ROWS OF
SERVER.
IT'S CLOUD BASED SERVERS?
>> Luke Denmon: THE DATA CENTER IS WHERE THE
CLOUD LIVES.
IT REFERS BACK TO DATACENTER,
THE ABILITY TO USE I.T. WITHOUT
KNOWING WHERE THE DATACENTER
LIVES.
>> Ted Simons: A LOT OF GROWTH IN THE FAMILY
IN THESE PLACES.
WHY?
>> Luke Denmon: A FEW REASONS.
THE ADOPTION OF TECHNOLOGY IS
THE PRIMARY DRIVER OF DATACENTER
GROWTH.
IF YOU THINK ABOUT WHAT YOUR
LIFE WAS LIKE FIVE YEARS AGO YOU
PROBABLY USED 33 TO 45% FEWER
APPS ON YOUR PHONE.
EVERY TIME YOU USE A NEW APP IT
TIES BACK TO DATACENTER
CAPACITY.
DATACENTERS ARE REACHING OUT AND
SERVING INDUSTRIES THAT
PREVIOUSLY WEREN'T USING IT SO
WE HAVE GROWTH IN AGGREGATE.
>> Ted Simons: SO TH SPACE IS GROWING
IN AGGREGATE, BUT WHY ARE WE SEEING SO
MUCH GROWTH HERE IN PHOENIX?
>> Luke Denmon: PHOENIX HAS BEEN ONE OF THE
PRIMARY IN THE UNITED STATES.
THAT GOES BACK TO WHEN COMPUTER
PHYSICAL SAFETY WAS THE PRIMARY
CONCERN OF THE DATACENTER.
IF YOU THINK BETWEEN HERE AND
TUCSON, IT'S THE SAME REASON
THEY PUT PLANES OUT THERE THE
SAME REASON THEY BUILT DESERTS.
IT'S DRY.
YOU CAN LEAVE STUFF IN THE
DESERT AND IT DOESN'T GET
RUINED.
THAT'S HOW PHOENIX GOT STARTED
AS A DATACENTER MARKET.
AS TECHNOLOGY EVOLVED, OUR MIX
OF SERVICES TO THE REST OF THE
WORLD HAS EVOLVED WITH THAT.
WE HAVE A VERY DIVERSE SUPPLY
MIX OF TYPES OF DATACENTERS HERE
IN ARIZONA.
>> Ted Simons: INTERESTING.
NO BIG NATURAL DISASTER IN
ARIZONA?
>> Luke Denmon: OTHER THAN THE HEAT.
>> Ted Simons: A HUGE THING, ISN'T IT?
>> Luke Denmon: IF YOU HAD $100,000 WORTH OF
COMPUTERS IN HOUSTON, AND NOW
YOU HAVE A HUNDRED THOUSAND
DOLLARS WORTH OF WET COMPUTERS
THAT DON'T WORK, WE DON'T SPACE
THOSE IN PHOENIX.
>> Ted Simons: AS FAR AS NETWORKS,
INFRASTRUCTURE, THOSE THING,
DOING WELL HERE?
>> Luke Denmon: ARIZONA IS ONE OF THE
STRONGEST TECHNOLOGY MARKETS IN
THE COUNTRY.
YOU HAD A SEGMENT A WHILE BACK
TALKING ABOUT TECH TALENT.
WE HAVE REGIONAL INFRASTRUCTURE
SECOND TO NONE IN THE STATE AS
FAR AS DIVERSE POWER COMPANIES,
FIBEROPTIC NETWORKS TO GO
WHEREVER YOU WANT TO GET.
THOSE ARE COMBINED TO HAVE A
GREAT DATACENTER MARKET.
>> Ted Simons: I WAS GOING TO ASK IS THE
MARKET BIG ENOUGH TO HANDLE THE
NUANCES THAT HANDLE WITHIN THE
MARKET?
>> Luke Denmon: IF YOU LOOK AT DATACENTERS,
THE WAY WE LOOK AT IT, THE
UNITED STATES OF NORTH AMERICA A
SINGLE MARKET.
WITHIN THE SINGLE MARKET,
PHOENIX IS A SUB MARKET.
WE HAVE STRONG FUNDAMENTAL SUB
MARKETS, AND I THINK THE KEY
DIFFERENTIATORS IS A REAL ESTATE
ASSET CLASS.
DATACENTERS DON'T HAVE TO BE TIE
TODAY A SPECIFIC USE GEOGRAPHY.
YOU HAVE A DATACENTER IN PHOENIX
SERVING PEOPLE IN CALIFORNIA OR
TEXAS OR WHEREVER BECAUSE OF
FIBEROPTIC NETWORK AND THINGS
LIKE THAT.
WE HAVE THE POWER AND FIBER TO
BUILD THE DATACENTER.
WE'LL TAKE THE CAPACITY AND SEND
IT TO MARKET.
>> Ted Simons: SO INVESTMENT IN DATACENTERS
IS BIG, RIGHT?
>> Luke Denmon: HISTORICALLY, ONE OF THE
HIGHEST POINTS.
>> Ted Simons: SO THAT'S GOOD FOR THE
VALLEY?
>> Luke Denmon: FANTASTIC. ANYTIME YOU HAVE TECHNOLOGY
AND INVESTMENT COMING TOGETHER
IN A MARKET THAT IS WELL
EQUIPPED WITH DATACENTERS, YOU
HAVE PEOPLE INVESTING AND
SPENDING MONEY ON PROFESSIONAL
SERVICES TO EXECUTE THE
TRANSACTIONS.
WHEN YOU SEE TRANSACTIONS LIKE
THAT, THIS IS THE HEALTHY SIDE
OF GROWTH.
THE FACT THAT WE HAVE A LOT OF
DATACENTER INVESTMENT HERE IN
PHOENIX MEANS THAT WE ARE JUST
REALLY SEEING THE STRONG
FUNDAMENTALS PLAYING THEMSELVES
OUT OVER THE LONG RUN HEREPLE
>> Ted Simons: AS FAR AS THE CONSTRUCTION
ASPECT OF THIS, DO WE BUILD NEW
STRUCTURES?
CAN THEY SURVIVE EXISTING
STRUCTURES?
MUST THEY BE IN A CERTAIN SPOT?
>> Luke Denmon: THE MOST COST EFFECTIVE WAYS
GO GROUND UP.
REHABBING A DIFFERENT BUILDING,
YOU HAVE ALL OF THESE UNKNOWN
COSTS OUT THERE.
DATACENTERS ARE ESSENTIALLY
SIMPLE TO BUILD.
YOU HAVE A FLAT FOUNDATION, FOUR
WALLS AND A ROOF FOR THE
STRUCTURAL COMPONENT.
EVERYTHING ELSE BOLTS ON OR RUNS
UNDER THE FOUNDATION.
ONCE YOU KNOW YOU HAVE THE POWER
AND FIBER IN SITE, DATACENTER IN
PHOENIX HAPPENS QUICKLY.
WE HAVE IN CHANDLER, ARIZONA,
ONE OF THE FASTEST FROM DIRT TO
DATACENTER PROJECTS IN THE
COUNTRY.
>> Ted Simons: LAST QUESTION, NOT A LOT OF
NETWORKS NEEDS.
HOW MUCH DO THEY PAY?
HOW MANY JOBS ARE WE TALKING?
>> Luke Denmon: ESSENTIALLY ANYONE IN THE
DATACENTER IS TOP END OF THE
SALARY RANGE RELATIVE TO FOLKS
IN THE SAME ROLE IN ANOTHER
INDUSTRY, BUILDING ENGINEERS,
YOU HAVE HIGHER BUILDING
ENGINEERS, SO THE WAGE IS AROUND
THE SIX FIGURE MARK.
JANITORIAL STAFF, THINGS LIKE
THAT ARE LOWER BUT TECHNICIANS
ARE HIGHLY PAID PROFESSIONALS.
DATACENTERS ARE NOT A HUGE
DRIVER OF DIRECT EMPLOYMENT.
IT'S ACTUALLY A FUNDAMENTAL
DRIVE OF INDIRECT EMPLOYMENT.
FOR EXAMPLE, COMPANY XYZ HAS A
DATACENTER.
IT TAKES 15 PEOPLE TO KEEP IT
SECURE AND MANAGE IT TO KEEP THE
GENERATORS RUNNING, BUT THEY
RENT TO COMPANIES BUYING ROOMS
IN THE COMPUTERS AND EVERY ONE
OF THOSE COMPANIES HAS A FULL
I.T. STAFF NEEDED TO MAKE THAT
ROOM WORK.
IT'S EFFECTIVELY LIKE A BEEHIVE
OF ECONOMIC ACTIVITY WHERE THE
COMPUTERS GO IN THERE AND PEOPLE
SHOW UP TO MAKE SURE IT WORKS.
>> Ted Simons: IT'S A MULTIPLIER THERE.
IT'S GOOD TO KNOW WE HAVE A
PARTICULAR MARKET GOING GREAT
GUNS HERE.
THANKS FOR THE INFORMATION.
>> Luke Denmon: FANTASTIC.
THANK YOU.
ºº

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