After a lengthy search, CyrusOne has secured land for a new data center campus in Santa Clara, the leading data center hub in Silicon Valley.
Over the past six months, the company has acquired two adjoining parcels with an on-site cogeneration facility, creating a 23-acre property where CyrusOne plans to deploy 144 megawatts of new data center capacity.
“We will have the largest data center campus in Santa Clara,” said CyrusOne CEO Gary Wojtaszek on Thursday’s earnings call. “We spent a number of years trying to find properties, and we were fortunate now in the last couple of months to assemble two properties that are adjacent to one another.”
The new project will bring more data center inventory and competition to Silicon Valley, which is one of the largest and most important data center markets in the U.S., but also one of the most difficult places to build new data centers. The entry of CyrusOne is the latest in a flurry of data center construction projects in Santa Clara, which promise to bring a steady flow of new server space online in 2019 and 2020.
CyrusOne will knock down several buildings from the previous owner, a recycled paper mill that closed in late 2017. But it’s keeping the cogeneration plant, which will provide up to 27 megawatts of on-site power generation.
“With innovative power cogeneration, our new data center will provide low energy costs for our hyperscale customers,” said Kevin Timmons, Chief Technology Officer at CyrusOne, who said the on-site electricity could be meaningfully cheaper than market rates from local utility Silicon Valley Power.
Site Selection Challenges
Santa Clara has long been the Data Center Capital of Silicon Valley due to competitive power pricing from the municipal utility, Silicon Valley Power. It’s the favored spot to deploy new hardware and services from the Valley’s marquee technology companies, as well as a legion of fast-moving startups. That’s why there’s 35 data centers are located in an 18-square mile municipality.
The region is facing a shortage of finished data center space due to a dwindling supply of development sites in key data center corridors. This was a challenge for CyrusOne, which announced its intent to enter the Santa Clara market back in 2016. But finding a site was not easy.
“Santa Clara is a market where we have spent a number of years trying to find properties to develop,” said Wojtaszek. “You’ve got to know what you’re doing. It’s a really expensive market to get into, so you’re back-solving for yields (return on investment) because the price that you’re paying for those properties are multiples of what you can get elsewhere around the country.”
Despite those challenges, rewards await those who can execute. “The supply constraints are why you see so many companies getting phenomenal yields on the investments that they made in that market,” said Wojtaszek.
Free Resource from Data Center Frontier White Paper Library
5 Reasons to Directly Connect Your Hybrid Cloud Solution
A new ebook from CoreSite introduces readers to a solution many enterprises are adopting – direct interconnect to cloud providers within a colocation facility. Download the new report to learn more about the potential cost and performance advantages this option for streamlining hybrid IT connectivity can create.New Inventory is Coming
That’s why a number of new developments are under way in Santa Clara and its neighborhood. Here’s a look at the inventory in the pipeline:
- Vantage Data Centers is building a new campus on Mathew Street in Santa Clara, where plans to create 69 megawatts of new data center capacity. The first phase of 21 megawatts is schedule to be delivered in the third quarter of 2019.
- CoreSite is developing its SV8 property, which will offer 175,000 square feet of data center space and 18 megawatts of power capacity. The 58,000-square foot first phase is expected to come online in the third quarter of 2019.
- Digital Realty has announced plans for a new campus on Lafayette Street that will add 48 megawatts of power across 403,000 square feet of data center space. The company has not yet set a timetable for delivery of the first phase.
- RagingWire Data Centers has just announced its entry into Silicon Valley with a 16-megawatt, 160,000 square foot building on a 3-acre site in Santa Clara, which will open for business in mid-2020.
- EdgeCore has acquired 12 acres in Santa Clara and plans a campus that can support four data centers and up to 80 megawatts of capacity. The 36-megawatt first phase is scheduled for delivery in 2020.
- STACK Infrastructure says its San Jose data center campus (previously operated by Fortune Data Centers and Infomart) is likely to be expanded, as it has a building available for retrofit and a parking lot that could be converted to data center use.
Wojtaszek said CyrusOne has begun work on its site, which will have a view of Mineta Airport in nearby San Jose. Given the lack of vacant development sites in Santa Clara, data center operators must buy properties with existing structures, raze the buildings, and redevelop the property for data center use.
“We’re starting to demolish the buildings and scrape all of the land,” said Wojtaszek. “We look to have capacity online in 2020.”
Building Vertically to Boost Capacity
As with other new projects in Santa Clara, CyrusOne will be building two four-story data centers to get the most capacity possible out of its existing real estate. The company expects to deploy 96 megawatts of capacity on its first 15-acre property, which it acquired in August for $53.1 million. The adjacent 8-acre parcel will house a 48-megawatt data center.
That yields a total of 144 megawatts, which would be the largest contiguous data center campus in Santa Clara, matching the combined 144-megawatt projected capacity of Vantage’s two campuses, which are about 2 miles apart.
Digital Realty has deployed 105 megawatts of power across 990,000 square feet of space in multiple properties across Santa Clara, and with its planned 48-megawatt expansion could push its total power deployment to 153 megawatts.
CoreSite (615,000 square feet) and Equinix (540,000 square feet) also have substantial data center footprints in Silicon Valley, but don’t publicly disclose details on their total power deployed across the market.
An illustration of the exterior of the planned CyrusOne Santa Clara data center. (Image: CyrusOne)
Timmons calls the Santa Clara development “an exciting new chapter for CyrusOne.”
“Part of our mission at CyrusOne is to help the world’s leading technology companies power this new exciting digital era we all live in,” said Timmons. “Continuing our expansion in Silicon Valley will help our customers turn their visions into reality.”
Making On-Site Power Work
A unique element of the CyrusOne project is its on-site power generation. The prior business at the site operated a cogeneration plant that uses natural gas to generate electricity. The plant features a GE LM2500 gas turbine, along with a heat recovery steam generator. This combination will allow CyrusOne to generate up to 27 megawatts of power for its data center customers, while using the steam heat from the turbine in absorption chillers to produce cold water for the data center’s cooling system.
This combination of gas turbines and absorption chillers was pioneered in 2009 at an IBM data center at Syracuse University, which served as a testbed for new approaches to sustainable operations. Reusing waste heat from data center operations has been a trend in Europe, where district heating systems can use the low-grade heat produced by servers. Facebook’s Denmark data center plans to use this heat recycling. Such systems are rare in the U.S., but turbines generate much higher temperatures, allowing the heat to be reused in industrial systems.
“It’s not common because it’s not cost effective to add it,” said Timmons. “But when it comes with the property, it’s a different story. Another hidden beauty of this site is that there was already a dedicated substation. I love what we’re going to be able to do competitively.”
Data Center Frontier is edited by Rich Miller, the data center industry’s most experienced journalist. For more than 15 years, Rich has profiled the key role played by data centers in the Internet revolution.
Christopher P Martin says
February 23, 2019 at 11:22 amWhy?
I asked the same question when companies like Amazon try to move into New York, why?
These areas need more space for citizens to live, data centers can be 70km to the east of this, be surrounded with solar, have access to rivers for cooling…
The latency is negligible at these distances, and super high bandwidth links can deliver 160Tbit connections across the ocean floor, so why put this here?
Rich Miller says
February 25, 2019 at 2:49 pmDo you want to live directly across the street from an airport runway? Do you believe other people see this as a desirable location for their future house? Most people don’t.
There are reasons for industrial zones and business parks. Data centers make sense in these areas, serve a useful business purpose and contribute to the tax base without creating additional strain on traffic or schools.
In cases where residential land is being rezoned for data centers, your argument is a legitimate one. But the property being used by CyrusOne is not a residential option.
Jen Blake says
April 1, 2019 at 4:31 pmDoes the property they are buying also include the surrounding buildings, as in the enterprise, and closer places like the repair shops?