Central Colo Enters Northern Virginia Data Center Market

Jan. 25, 2017
Colocation provider Central Colo has entered the Northern Virginia data center market, acquiring the Tyson Technology Center in Vienna from the Meridian Group for $96 million. The company has already installed its first new tenant.

Central Colo has wasted no time expanding beyond its first facility in Silicon Valley. The colocation provider recently entered the Northern Virginia data center market, through an affiliate acquiring the Tyson Technology Center in Vienna from the Meridian Group for $96 million. The property consists of a 200,000-square foot Tier 3 data center and an 80,000-square foot office building, and is 75 percent leased.

The acquisition comes just four months after Central Colo unveiled new expansion-minded investors in Safanad Capital, a global investment firm, and San Francisco private equity firm Industry Capital. New CEO Ken Parent indicated the company would begin scouting for opportunities to enter markets beyond Silicon Valley, where it operates a former Level 3 facility in Sunnyvale. The Central Colo team moved quickly to enter Northern Virginia, the industry’s largest and most active data center market.

“If you’re going to start with two markets, you can’t do better than Silicon Valley and Northern Virginia,” said Parent, who has experience building a data center network from his tenure as was CEO of ByteGrid. “The Tysons Technology Campus gives us the perfect East Coast asset. These two assets provide the company with a strong platform for growth as we look to continue to expand in additional markets, and support our customers with a variety of connectivity and hosting services supporting hybrid IT solutions.”

Looking Beyond Ashburn

The Tyson Technology Center project is just off the Washington DC beltway within the Tysons Corner market, one of the largest office submarkets in the greater Washington DC metro area. It’s about 12 miles from “Data Center Alley” in Ashburn, home to a large critical mass of data centers.

The distance from Ashburn is not an accident. Central Colo will focus on 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. That’s a strategy better suited for Vienna and its concentration of business customers than the cloud builders that dominate the scene in Ashburn and Sterling.

“In our mind, trying to compete with CyrusOne or speculative builds didn’t make a lot of sense,” said Jason Green, Chief Technology Officer at Central Colo. “We thought we could identify assets with infrastructure and a certain amount of customers. (Tyson Tech) has excellent connectivity, and plenty of additional capacity available.”

Two Weeks? No Problem

Central Colo has already added a new customer, delivering new space for Atlantic Metro (InfoRelay) in just 12 days to meet a sudden expansion requirement. Green and the Central Colo team retrofitted a data center suite that hadn’t been active since 1998, and extend existing power and cooling infrastructure to the new space.

“With a rare combination of physical proximity to both Washington, DC and Ashburn, Va., and a power infrastructure separate from Ashburn, CentralColo is the ideal location to support delivery of our managed cloud services to large enterprise and government customers,” said Russell Weiss, President, Atlantic Metro/InfoRelay.

Current tenants include government agencies and “some of the world’s largest hyper scale cloud and network providers,” according to Central Colo. The building’s address is publicly identified as a data center for Equinix, the world’s largest provider of colocation and interconnection services.

Parent estimates the building has existing space to support between 1.5 and 2 megawatts of additional tenant capacity. “We’re also going to explore adding 4 megawatts of capacity over the next six months to two years,” said Parent.

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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