Vantage Plans Major New Data Center Campus in Santa Clara

Aug. 4, 2016
It’s getting tough to find space to build data centers in Santa Clara. That’s why Vantage Data Centers has secured a 9-acre site for a new cloud campus, which will be home to four data centers.

Santa Clara is the data center capital of Silicon Valley. But it’s running out of places to put them.

As the supply of undeveloped land in Santa Clara dwindles, Vantage Data Centers is moving to secure its future in its home market. The company has lined up a 9-acre site in Santa Clara for a major new cloud campus, which will be home to four data centers offering 51 megawatts of critical IT load.

The new campus, which is expected to come online in 2018, will be deployed in phases. It is the latest in a series of moves by Vantage to provide capacity for future growth in Santa Clara. The company has filled most of its original 51-megawatt campus, and in May announced plans for a 21 megawatt expansion that will add two more buildings on adjacent land in 2017.

The expansions reflect the limited supply of data center space in Santa Clara, and on the Vantage campus. The company just pre-leased its entire 6 megawatt V4 data center, which is under construction and will be completed later this year.

Strong Demand in Silicon Valley

There’s been hot demand for data center space in Santa Clara during the first quarter of 2016, with CoreSite signing a tenant for an entire phase of its new building in Santa Clara, while DuPont Fabros leasing a whopping 16 megawatts to a single customer. That builds on strong successes in 2015, including boffo leasing for Vantage, which signed four leases of 2MW or more during the year.

Sureel Choksi, the President and CEO of Vantage Data Centers, said the expansion “underscores Vantage’s strong commitment to supporting our customers’ long term growth in Santa Clara.

“When combined with the 21MW planned expansion of our existing campus, Vantage has secured 72MW of total expansion capacity in this highly constrained market, solidifying its position as Santa Clara’s leading wholesale data center services provider,” said Choksi.

High-density server workloads inside a data hall on the Vantage Data Centers campus in Santa Clara, Calif. (Photo: Vantage Data Centers)

The Site Selection Challenge

The constraints aren’t limited to data center space. It’s also difficult to find land for new data center development.

“Santa Clara is very tricky for a number of reasons. ” said Choksi. “It’s becoming difficult to find suitable sites. There’s a scarcity of real estate, and getting power at scale is challenging. In Santa Clara, there’s effectively no land available. So any expansion requires buying an existing property and knocking buildings down.”

That translates into a lengthier process, including site selection, power provisioning and construction.

“It takes three years, start to finish, to deliver campus capacity at scale.” said Choksi. “”We’ve been working on an expansion plan in earnest for 12 months now. Getting ahead of that is important, which is why we’re doing it now.”

The new campus will be located about two miles from the existing Vantage campus. The company is not disclosing the exact location yet, but says it plans to begin construction of a new Silicon Valley Power substation in 2017. Silicon Valley Power, the municipal utility in Santa Clara, offers cheaper rates than surrounding towns served by PG&E, making Santa Clara a magnet for power-intensive data centers.

Building Up For More Capacity

To get the most out of every square foot of real estate, Vantage is updating its data center design. “Everything we’re building will be between two and four stories, which is different from what we have done in the past,” said Choksi.

Vantage has begun construction on V6, a two-story, 9 megawatt data center adjacent to its existing campus. It will be followed by V5, which is planned as a four-story building with 12 megawatts of capacity.

Vantage Data Centers was founded in 2010 with backing from private equity firm Silver Lake Partners. The company acquired and redeveloped an Intel data center campus in Santa Clara. The company also operates a data center campus in Quincy, Washington. In February the company secured $295 million in additional debt financing, bringing its bank facility to $570 million.

Active Leasing Likely to Continue

Last year Santa Clara saw its most active leasing since 2011, according to an analysis by North American Data Centers, which tracks the wholesale data center market. In its annual market review, the real estate firm reported eight leases of 2 megawatts or more in the Santa Clara market during 2015, including four big leases for Vantage.

“Demand in the market continues to look very strong,” said Choksi. “Over the last three years, demand has averaged 35 megawatts to 40 megawatts a year in Santa Clara. We don’t really see any change in demand. In fact, 2015 and 2016 would be higher if not for supply constraints. Our belief is that number should be higher going forward, so long as supply is available.”[clickToTweet tweet=”Vantage CEO Sureel Choksi: It’s becoming difficult to find suitable sites in Santa Clara.” quote=”Vantage CEO Sureel Choksi: It’s becoming difficult to find suitable sites in Santa Clara.”]

Industry analysts concur. “Demand fundamentals still remain strong in the Bay Area and the outlook remains bullish for uptake of data center capacity with cloud providers being the primary customers,” said Jabez Tan, Research Director, Data Center Infrastructure at Structure Research.

Choski said the competitive landscape for data center providers continues to be shaped by large leases for capacity for hyperscale cloud companies.

“Those deals continue, both here and in other major markets,” he said. “The key to compete for those is to have the real estate and power in place, and be in position to deliver that capacity.”

That’s why Vantage continues to expand. “It’s an attractive business opportunity, and imperative to serve our customers here,” he said. “We’ve had five existing customers continue to grow with us. There are also new logos we continue to speak with. We will continue to expand in Santa Clara over the long-term, and we continue to actively evaluate other markets.”

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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