With New CEO and Funding, Central Colo Looks to Expand

As Ken Parent surveys the opportunities for Central Colo in the Silicon Valley data center market, he likes what he sees.

“Silicon Valley is an attractive market if you have supply,” said Parent, the new CEO of Central Colo, which operates a 94,000 square foot data center in Sunnyvale, which has ample capacity space available.

Parent has joined Central Colo as part of an investment from Safanad, a global private equity firm with ambitions in the data center sector. Those aspirations extend well beyond Silicon Valley, as Parent and Safanad say they hope to build through acquisitions.

“The goal is to create a national platform,” said Parent. “We have an asset with considerable upside in Silicon Valley. It’s a great launching point. Once we expand in the U.S., we have designs on being a global player.”

But first, there’s the challenge of selling data center space in Silicon Valley, one of the most competitive markets in the country.

Central Colo was launched last year by industry veteran Arman Khalili, with backing from San Francisco investment firm Industry Capital. Khalili, who previously founded and led Bay Area colo specialist UnitedLayer, will remain on the board of directors of and continue to “dedicate significant time to the growth of CentralColo,” the company said.

Immediate Supply in a Tight Market

Safanad’s investment was described as “significant,” while Industry Capital will remain an investor.

“CentralColo will be well capitalized to support the growth of its current operations in Silicon Valley as well as new locations to meet the needs of the growing client base,” said Craig Kahler, Director of Private Equity at Safanad, who joined the board of CentralColo. “We are thrilled to work with Ken Parent and the rest of the management team.”

Parent was previously the CEO of ByteGrid, which specializes in acquiring data centers with an existing tenant and vacant space, typically using a sale/leaseback model that provided a combination of recurring revenue and upside from leasing vacant space.

The company’s first building is a former Level 3 data center in Sunnyvale, which has 4 megawatts of power capacity in its first phase. Early tenants include Baidu Research and Packet, which offers bare metal cloud services. Parent says the facility has plenty of power and space available in a tight supply market.

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“I don’t know if there’s another provider in Silicon Valley with more than 2 or 3 megawatts available,” said Parent. “We can deliver up to 4 megawatts very quickly, and then another 4 megawatts in three to six months.”

Parent says Central Colo’s facility can handle high density compute requirements, including research and development operations, which have been moving out of office campuses in Silicon Valley as companies staff for growth and require additional office space.

An aerial view of Central Colo’s data center in Sunnyvale.

Most of the data center industry’s major players compete in the Silicon Valley market, with most based in Santa Clara, where power costs from municipal utility Silicon Valley Power are cheaper than rates from PG&E in most surrounding areas, including Sunnyvale. A number of other players are working to bring new supply to market, but Parent believes the ability to cool high-density workloads will be a differentiator for Central Colo.

“One of the beauties of this project is that we can cool significant densities from 5kW up to 22kW,” said Parent, who said that capability was an advantage in winning the Baidu Research deal.

Safanad has offices in New York, Dubai and London. The company describes itself as an investment boutique that embraces a “weather map” model to detect trends and partner with specialists in emerging growth sectors.

Fully-Funded Growth Strategy

Industry Capital said it welcomes the new investment. “Our partnership with Safanad comes at a great time for CentralColo, as we have laid the foundation over the past year,” said Norman Villarina, Managing Partner at Industry Capital. “Our expansion plans are well supported by Ken joining us as CEO as he not only brings significant expertise in managing and acquiring data centers, but also significant skills in leading the growth of organizations.”

“Our partners have funded our growth strategy and support both our organic growth and strategic asset acquisition plans,” said Parent. “I wanted to make sure I’m teaming up with someone with deep pockets, who understands the size of the checks needed to compete in this space. They understand the global aspects of what we want to accomplish.”[clickToTweet tweet=”Central Colo CEO Ken Parent: Our goal is to create a national platform.” quote=”Central Colo CEO Ken Parent: Our goal is to create a national platform.”]

Parent says the Central Colo team is already in discussions about acquisition opportunities.

“I think there’s a lot of good value-add opportunities for us,” said Parent. “We’re seeing more and more interesting (acquisition) opportunities than I’ve seen before.

While there are many properties for sale, Parent said his team is interested in opportunities in second-tier markets, but will shop carefully for deals that fit their investment criteria.

“Clearly, there are markets we want to be in, but you have to match the market to the opportunity,” he said. “We’re not going to build greenfield, at least right now. We’ll look at any market that may be underserved. We could be pretty substantial in 4 or 5 years, growing a little at a time.”