Brant Bernet: The Maturation of the Data Center Business
Posted by Brant Bernet on Tue, Jun 14, 2011 @ 03:05 PM
I am a dinosaur. I’m not really all that old (I’ll be 46 this summer; my four kids are firmly committed to the notion that 46 is, in fact, old), but I entered the real estate brokerage business as a 20-year-old junior at Southern Methodist University, and 25 years of anything is a long time. Plus, real estate brokerage tends to unnaturally age a person.
What the heck was I going to write about? Oh yes, the maturation of the data center business.
Ours is an industry that is in its early childhood, maybe even infancy. We will continue to mature, continue to grow for many, many years. As terabytes of storage turn into exabytes and exabytes trun into yottabytes (by the way, we don’t have a word for what comes next, but I’ve seen some wacky suggestions; I’m voting for a brantobyte), the world of data storage will continue to change. New ways to house or store information will emerge and evolve, along with new ways to cool the massive amounts of heat generated by the information-gobbling servers.
Real estate brokers have had to adapt or be left behind. Although the components of a data center transaction have traditional roots—net rent, taxes, insurance, CAM, janitorial and utilities—the line items associated within those components look nothing like their earlier counterparts. Take power, for instance. Did we brokers used to care about the hedging mechanisms used by landlords to ensure the absolute lowest cost of power? I sure didn’t. The math necessary to figure a tenant’s cost of power is elementary (I should know, elementary school math is about when I told my kids they were on their own), but you wouldn’t believe the teams of risk managers and Wall Street gamblers that are constantly working to shave nickels and dimes off the power bill.
And what about the PUE (power usage effectiveness)? Are brokers really expected to know how that is calculated and what constitutes a good PUE? Yes sir, we are. Simply put, the PUE gauges the efficiency of a data center by comparing the overall cost of power to the cost of power needed to run the IT equipment (total power/IT power). The higher the number, the less efficient the data center; the less efficient the data center, the higher the overall power cost. And then, is the landlord charging for metered power (the amount actually used by the tenant) or by the breaker (the amount the tenant has the right to use), and how should the landlord be charging? Whew, it’s just not fair; where have the simpler times gone?
For data center users, simpler times are gone for good. The complexities and the enormous costs associated with data center real estate require keen and focused attention. I grew up in Dallas. In August, when the asphalt was boiling hot, we would step on the gooey mess and pretend we were dinosaurs being slowly consumed by the Le Brea tar pits. Someone would inevitably lose a shoe or ruin a sock, but none of us ever went the way of the woolly mammoth.
Today, if you are an IT director, a chief information officer or a … gulp … real estate broker, and you are not well versed in the perils of data center real estate, you might not be so lucky.
Brant Bernet is co-founder and managing director of Lincoln Rackhouse. Contact him at brant@rackhouse.com.