CyrusOne, on the way to becoming one of America’s fastest-growing multitenant data center proprietors, bet big on the Arizona desert.
Today, with over $400 million in net annual revenues and a stock price that’s climbed 23 percent since January 1, the 5-year-old firm is well on its way to cashing in its chips.
How CyrusOne got to this point, and how other more established players like Digital Realty are also thriving in the Greater Phoenix market, is largely attributable to the unique array of services they receive from Salt River Project.
A $3-billion, 5,100-employee company based in Tempe, SRP has been delivering reliable, low-cost electric power to the people of Arizona for more than a century. Now they are enabling an empire of data centers that fuel cloud computing, the Internet of Things, and the Fitbit you’re probably wearing to count your steps today.
Unless you happen to see one of their trucks delivering line workers to fix a problem, you likely never see the results of the work they do. Yet without SRP, Greater Phoenix would not be the mecca of Internet-driven companies and the data centers that power them 24/7/365.
CyrusOne is a case in point. “Greater Phoenix is one of our favorite locations,” says Sylvia Kang, vice president of site selection and energy management for CyrusOne, which owns and operates an 85-acre data center campus in Chandler. “We just purchased a 29-acre parcel south of our current location and we have decided to lay down roots here. This is a successful location for us because Arizona is an extremely business-friendly state; the passage of the sales and use tax exemption in 2013 has driven large customers to Arizona; the qualification process for a new data center site is usually very onerous, but in Arizona it is expedited in just a few steps.”
Delivering Infrastructure and People
SRP provides the essential infrastructure that CyrusOne needs, Kang adds. “We must have robust metro fiber, and SRP provides that fiber network throughout the Phoenix MSA,” she notes. “But the number one reason we are here is their ability to bring power to the site. They have made very deep investments into their transmission network which provides the level of power required for large data center investments. Plus, SRP is responsive throughout the site selection process and brings the right people to the table making the process efficient. In the data center world, we are always asked to do more faster, so their efficiency is appreciated.”
A 90-megawatt substation feeds two CyrusOne data center campuses in Chandler, says Kang, and both sites have been expanding for five years. “We are also in Virginia, Dallas, Chicago and New York, but we plan on being in the Phoenix area for a long time. This is an ideal location from a risk standpoint, and SRP is so mature in their network and so responsive. To us, that is our lifeline.”
CyrusOne is not alone. Digital Realty Trust is another dominant data center provider in Greater Phoenix, and like CyrusOne, it relies heavily on the infrastructure and support of SRP.
In June, Digital Realty announced a $7.6-billion acquisition of DuPont Fabros Technology that makes Digital Realty the second-largest data center REIT in the country. With a 519,000-sq.-ft. data center on South Price Road in Chandler, Digital Realty owns and operates the largest data center in Arizona. The facility has 23 megawatts of critical IT power. It also includes a substation capable of providing up to 60 MVA of power to clients ranging from financial services and retail to cloud/IT services and social media platforms. SAS 70 certified, the building is undergoing SOC2 certification with 24/7 security and critical facilities management.
SRP offers a plethora of services and benefits to data center operators. Existing facilities and facilities already under construction can qualify for a standard rebate program as well as a custom rebate program that can reduce energy usage and save substantially on costs.
In addition, the SRP DataStationTM Project is an innovative program that aims to support the data center industry’s existing and future growth challenges.
Responding to a Changing Industry
Clint Poole, manager of the SRP Telecom Group in Phoenix, is responsible for SRP’s commercial fiber network that includes 1,800 route miles of fiber covering 15 cities in the valley and its new DataStation Project. “We work with data centers all the time to understand and enable their critical infrastructure,” he says. “A shift within the industry is coming. That’s what DataStation is all about. Having an integrated utility data center — called DataStation — can increase performance and reliability while reducing costs.”
Making use of modular data center technology, DataStation solves many of the problems with traditional data center operation by building the data center at the power grid itself. It uses no generators or UPS systems. Instead, it relies on a “grid-on-grid” backup system.
SRP is working with BASELAYER, another Phoenix company, to build and roll out these prefabricated, modular data centers.
“Through this work on DataStation, we have created a new class of data center,” says Poole. “We have real estate throughout the valley; this, coupled with a resilient power backbone and our fiber network, enables us to rethink what data centers may look like in the future. With the DataStation, we completely optimized the data center. We tap into the performance of the grid’s backbone which allows us to remove traditional data center components that have historically been related to most failures.”
With ample power, water, land and fiber, Greater Phoenix has everything a data center operator needs, adds Poole. “SRP has a legacy in building essential infrastructure that enables local economic growth. Fiber optics and DataStation are just a few examples of the continuation of this story. Similar to water and power, which lead to agricultural and industrial growth in the Valley, fiber optics and data center infrastructure are necessary for the growth of Arizona’s new digital economy.”
This Investment Profile was prepared under the auspices of Salt River Project. For more information, contact Karla Moran of SRP at 602-236-2396 or Karla.Moran@srpnet.com. On the web, go to www.powertogrowphx.com