Expedient in Growth Mode to Support ‘Cloud Journey’ in Regional Markets

Nov. 2, 2021
Expedient is an experienced player in the local data center business, and sees an opportunity for growth through sale-leasebacks in regional markets. The cloud services specialist has just added two new data center locations in Milwaukee and Phoenix.

Activity is picking up in regional markets, where data center providers are expanding their networks to offer cloud services to businesses of all sizes. As enterprise IT spending picks up after a pandemic pause, there’s opportunity in these second-tier markets.

Expedient is an experienced player in the local data center business. Founded in 2001, the company has a long history of growth through acquisitions. Having steadily built a comprehensive portfolio of cloud services, Expedient is now looking to expand by acquiring corporate data centers using a sale/leaseback model. Today the company is opening its 13th data center in Phoenix, just weeks after launching a new facility in Milwaukee.

“We really help people accelerate to the cloud operating model,” said Bryan Smith, Senior Vice President and Chief Strategy Officer for Expedient. “A big part of what makes us unique is the breadth of our services.”

The expansions in Phoenix and Milwaukee will bring those services to more markets, and Smith expects there will be additional new sites added over the next two years – perhaps many more.

“We’re continuing to build out new data center locations in under-serviced markets to meet growing customer demand,” said Smith. “This latest data center in Phoenix is just the beginning of our expansion plans.”

Expedient sees an opportunity in the enterprise sale-leaseback market.

“All but one of our data centers was an enterprise data center that we converted into a multi-tenant data center,” said Smith. “With the pandemic, companies are reassessing their position on real estate. We’ll take on the data center land and create a cloud availability zone with public cloud nodes and connectivity, tying them to our backbone and hyperscale facilities.”

Cloud Services for SMBs and Enterprises

Expedient was founded in 2001 as US Voice Data, and embraced the brand of one of its early acquisitions. It’s backed by AMP Capital, an Australia-based global investment fund that acquired Expedient from Continental Broadband (Landmark Media) in 2019.

The company has historic expertise in hosted virtualization and disaster recovery as a service (DRaaS), and now focuses on enterprise cloud services running on VMware, including a container-driven approach to app modernization, Expedient has about 1,500 clients, with a sweet spot in large SMBs and small enterprises. Many of its customers have ambitions for the cloud, but struggle with technical debt.

Expedient is among a group of providers targeting regional markets beyond the “Big Six” business markets that have seen the strongest growth for multi-tenant providers. DataBank, EdgeConneX, Flexential, TierPoint, Evoque and Element Critical are all pursuing growth strategies focused on second-tier markets. Like Expedient, most have capital backers that can support further expansion.

That’s because investors are now looking beyond major markets and hyperscale data centers, which have received the lion’s share of investment amid strong demand for cloud computing services. The growing confidence in business models targeting second-tier markets is making it easier for regional operators to raise capital for expansion.

Sale-Leaseback Strategy Key to Growth

Expedient has a data center buyback program, offering a strategic partnership to sellers.  In a sale-leaseback transaction, an enterprise company sells its data center to a third-party, and then leases the space it needs to operate its existing IT facilities. The buyer, usually an investor or data center service provider, collects the rent and can lease the remaining space.

This type of deal solves a common problem. An enterprise company builds a large data center, assuming its IT operations will grow. It winds up not needing as much space as it expected, due to increased use of virtualization or third-party cloud computing services. As a result, large expanses of expensive data center space sit empty.

Smith says his company’s experience in regional markets has helped it define a strong strategic template for sale-leasebacks. It’s not the only player using this strategy (Element Critical and Lincoln Rackhouse are other examples)

The exterior of the Expedient facility in Milwaukee. (Photo: Expedient)

“We’ve always been a tier two focused company,” said Smith, who noted that second-tier markets have been hard hit by the ongoing labor shortage. “Our approach is to layer in the cloud scenarios. It’s challenging for some real estate investors to provide this type of offering. We look at it as a very different model.”

In Phoenix, Expedient is bringing its tech stack to a 45,000 square foot, 2.4-megawatt data center with capacity for about 17,000 servers. The new site will serve customers including the University of Phoenix, Los Angeles Regional Food Bank and Blue Cross Blue Shield of Arizona,

“Having Expedient here locally, in region, is a game changer for us,” says Weldon Wu, CIO at the LA Regional Food Bank, a tenant at the new Phoenix data center facility. “They continue to help us on our cloud journey, finding new ways to drive greater efficiencies and bottom-line results.”

In Milwaukee, Expedient took over a former Harley Davidson data center with 28,500 square feet and 1.3 megawatts of power and capacity for more than 8,000 physical servers.

“This isn’t a rip-and-replace or a one size fits all approach,” said Smith. “We see an evolution and journey taking place whereby our clients are improving overall enterprise efficiencies by being able to pick and choose optimal solutions around infrastructure, data management, automation, security and networking.”

Their arrival was welcome by officials in Milwaukee, which like many regional cities is seeking to build a strong technology ecosystem.

“Expedient’s decision to invest in a Milwaukee area data center shows the importance of midwestern cities to the growing tech industry,” said Kathy Henrich, CEO of the MKE Tech Hub Coalition, a non-profit supporting the local tech community. “A combination of high caliber talent, stable geography, and growing investment in tech by traditional industries make the Milwaukee region an ideal location to service midwestern clients.”

About the Author

Rich Miller

I write about the places where the Internet lives, telling the story of data centers and the people who build them. I founded Data Center Knowledge, the data center industry's leading news site. Now I'm exploring the future of cloud computing at Data Center Frontier.

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