Growth of Boston’s data center market driven by biopharmaceuticals, energy efficiency

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Cole_Gabe_Interim2Veteran technology executive Gabe Cole recently joined JLL to lead the New England Data Center Practice Group. Gabe brings more than 20 years of experience in the industry, having most recently served as Founder and Principal of RTE Group, a technology consulting firm specializing in data centers, telecom hotels, network, and cloud infrastructure. We recently sat down with Gabe to get his perspectives on this fast-growing and ever-evolving market.

How has the data center market changed over the last several years?
As more services are moving to the cloud and to centralized service providers like Amazon, Google and Microsoft, you’ve had an emergence of mega data centers. These are typically located in places where there are cheap power costs (2-4 cents per kilowatt hour) like Eastern Washington, Eastern Oregon, Iowa and the Carolinas. That’s created a need for edge data centers near where people work and use their phones and internet in every other population center in the US. As a result, we’re seeing data centers grow at the core and on the edge.

How has that trend impacted the local market here in Boston?
Boston has always been at a disadvantage for data centers because of the cost of power which has traditionally been among the highest in the country. As a result, most of the data centers here are driven by either local companies and institutions that want data to be closer to them or by the need to deliver these edge services efficiently to the population here. The other thing that’s changing a little bit is that data centers are becoming much more energy efficient. Whereas 5 years ago power was a sole determining factor, now for smaller scale, the efficiency has gotten a lot better. This has made Boston a more viable data center market today than it’s been in the past.

That said, what is the primary driver of growth locally?
The biopharmaceutical market is driving a lot of growth. It’s much more computational today than 10 years ago. One of the biggest growth areas in biopharma is the modeling of human genomes and detailed simulations of how different medications and treatment therapies impact those, so that end of computing has grown tremendously and increased demand. Typically, because of the size of the files, it needs to be local to where the researchers are so that’s a significant driver in this area. Similarly, Universities like MIT and Harvard have substantial networks and a lot of companies need to connect directly to those networks because they’re doing research together.

Are they any specific submarkets in the Boston area where data centers are springing up in larger clusters?
The most important part of data centers today is the network. As a result, they’re typically clustered around areas where there are multiple networks and where those networks cross. This includes areas like I-495 and the Mass Pike, Route 128 within 5 miles of the Mass Pike in either direction, Downtown and Cambridge. This is where the networks were originally built which makes these the most desirable locations.

What is the most significant factor impacting the future of the local market?
I think the future of the market is determined by the energy efficiency side of the equation. We’re in the final phases of a project that could soon become the greenest data center in Massachusetts. For this we’re looking at technologies like fuel cells for power that will be cheaper and very efficient cooling systems that maximize the value of the cold air in winter. We’re making it highly efficient from a design perspective and looking for a cheaper way to generate power. To the extent we’re successful doing that, I think that becomes the model of what works in Boston. Similar to Europe, we have high prices everywhere, so we don’t really have a choice but to be efficient. I think as the technology improves and energy efficiency and alternate sources of energy improve, that makes Boston a good place for data centers and will lead to future growth.

What else should people know?
Everybody says everything is moving to the cloud, so doesn’t that mean data centers are going away? The obvious reality of that is that the cloud needs somewhere to live, but it is different and it is changing the data center market a lot. 10 years ago, if you went into a data center each individual company had its own space and equipment. Today, most big companies including JLL buy a lot of cloud services. So while the company footprint in the data centers has shrunk, the service provider footprint to provide those shared services has grown and has different requirements. When you were building for individual companies, you built something that was very flexible. If you’re just building for Microsoft or Google, you’re customizing the data center to just work for them and to cut costs out of it because they’re very driven by the cost of delivering those services. This has caused the data center industry to evolve to become more efficient and build more cheaply than in the past.

For more on the local data center market, feel free to contact Gabe and follow him on Twitter @datacenterguru.

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