It’s easy to look at last month’s Cologix acquisition of COLO-D and focus on its significance for the fast-growing Montreal region. There’s no doubt that the deal helps colocation and interconnection provider Cologix lock down its leadership in one of its key geographic markets.
But that’s only part of the story. The COLO-D acquisition gives Cologix the ability to rapidly deploy hyperscale data center capacity, which will shape the company’s entrance into other markets – including Data Center Alley in Ashburn, Virginia.
Cologix has acquired the current site of the Christian Fellowship Church, and will begin converting the property into a data center campus as the church relocates. The 23-acre parcel sits next to the world’s largest Internet intersection, immediately adjacent to campuses for Equinix and Digital Realty.
“We’ve kicked off design of a 100 megawatt campus in Ashburn,” said Cologix CEO Bill Fathers. “We’re using the same design COLO-D has been using in their hyperscale facilities, and folding it into our design for Ashburn.”
The acquisition of COLO-D and entry into Northern Virginia are signs of a strategic shift for Cologix, which is expanding beyond its core business of colocation and interconnection services in regional hubs, and looking to offer larger footprints in hyperscale markets.
Joining the Hyperscale Players
That’s where the COLO-D acquisition comes in. Cologix has historically featured data centers in the 2 MW to 10 MW range, while COLO-D is a hyperscale specialist, building 20 to 35 megawatt facilities for cloud computing customers.
Cologix was impressed with COLO-D’s data center design, which is optimized for rapid deployment of large footprints. The design features two levels of raised floor, segregating the cabling and cooling into separate layers, and can support power densities of up to 30 kW per rack. COLO-D has an established, repeatable process for deploying 2 megawatt data halls in 90 days.
“Their build economics are astonishing,” said Fathers, who said COLO-D’s procurement and construction expertise allows it to deploy a megawatt of new capacity for about $6 million Canadian (about $4.5 million U.S.).
It’s not clear whether those numbers will hold true across other markets, but Cologix believes it now has a compelling offering for hyperscale customers.
When it comes to hyperscale, there’s no market like Northern Virginia. As the primary on-ramp for major cloud computing platforms, Northern Virginia is experiencing powerful growth, as the leading data center REITs and colocation providers race to provide capacity for fast-growing cloud service providers and the digital businesses that seek to connect to these clouds.
The Power of Proximity
In Northern Virginia, the key metric in data center location is “distance to Equinix” – meaning the interconnection hub where more than 200 networks exchange traffic. There’s no property closer to Equinix than the campus of the Christian Fellowship Church (CFC).
In 2017, church members voted to pursue a sale of the property, and use the proceeds to relocate to a new facility near their current location. The CFC’s decision to sell illustrates how the data center building boom is impacting the real estate market in Loudoun County. Strong demand for data center sites has driven up the price of land in Ashburn, where development sites are becoming scarcer.
A Critical Mass of Cloud Computing Capacity
What’s so special about Northern Virginia? A number of key business drivers have aligned, including new customers and new providers entering the market, and a dwindling supply of premium development sites. As the concentration of cloud capacity in the region reaches critical mass (especially for Amazon Web Services) space in Ashburn has become the table stakes for companies with serious ambitions in cloud computing.
Recent market entrants include CloudHQ, Vantage Data Centers, EdgeCore Internet Real Estate, Aligned Energy, QTS Data Centers, Sentinel Data Centers, Chirisa Tech Centers and Northstar Commercial Partners. The lengthy list of current players in Northern Virginia with data center space under development includes Digital Realty, RagingWire Data Centers, Amazon Web Services, CoreSite, Sabey Data Centers, CyrusOne and Infomart.
As with other recent entrants, Cologix plans to build big, and has filed preliminary plans to build nearly 1 million square feet of space in three buildings. The first data center will be built on athletic fields adjacent to the 200,000 square foot building that houses the church and a Christian school. The church is using the proceeds from the sale to build a new facility about four miles away, and plans to complete its relocation by 2020.
“There is a phasing process for the entire campus, but we have sufficient runway to build 60 megawatts now, even before the church relocates,” said Fathers. “We literally just started pre-marketing, and the interest from the market suggests we’ll have a lot to talk about.”
Cologix will construct a multi-story building, embracing a trend toward vertical data centers in markets like Ashburn where land is constrained. Fathers said that Cologix hasn’t finalized its design, which will likely be shaped by the needs of an anchor tenant, and could feature either two or three stories and up to 11 data halls. The facility will also include a network-centric meet me room, creating a cloud on-ramp.
“It’s certainly Cologix, but will look a lot like the COLO-D brand and product,” said Fathers. “It will include our basic next-generation meet-me room design, with a lot of software-based switching fabric.”
Investing in the Cologix Platform
Private equity firm Stonepeak Infrastructure Partners acquired Cologix in early 2017, calling it “a marquee platform to enter the data center and interconnection market in North America.” Stonepeak says it will invest $500 million in the growth of the Cologix platform.
The pending entry into Ashburn is one sign of how Stonepeak’s backing provides Cologix with the financial resources to compete on a new level. Stonepeak is an investor in companies that operate cell towers (Vertical Bridge), small cell wireless antennas (Extenet) and fiber (euNetworks). As an infrastructure fund, it also invests in energy and telecom assets. It is one of several new players in the data center sector positioned to benefit from the convergence of wireless infrastructure and data centers with the impending arrival of 5G connectivity and low-latency edge computing.
Cologix has data centers in Dallas, Northern New Jersey, Minneapolis, Jacksonville and Lakeland, Fla. and Columbus, Ohio in the U.S. and Canadian sites in Montreal, Toronto and Vancouver.