Lowered Oil Prices Have Energy Companies Turning to Data Centers

Skybox Datacenters is targeting the Houston market hard: managing partner Rob Morris tells us its development plans here are its largest undertaking to date. Hear why a data center developer would invest so much into Houston at Bisnow’s Houston Data Center event Nov. 4, starting at 7am at 1301 Fannin. (Register here.)

Rob (a panelist at our event, he’s in the red above with colleagues Gordon Kellerman and Ben Atkins) tells us Houston has been a great city for Skybox, which opened its first facility here in February. He’s been nothing but thrilled by demand and the level of sophistication among Houston’s companies (it’s better than most markets, he says, thanks to the energy industry). Weakened oil markets are actually helping drive data center activity, Rob says. The same happened in the recession—when companies get more cost-conscious, they’d rather have an operating expense than a capital expense. In the last three to six months, Rob’s gotten calls from numerous companies that had planned on building their own data centers that now want to lease.

Skybox is building out 30 acres in northwest Houston. Phase 1 started out spec (we snapped the groundbreaking here) but turned into a spec-to-suit when a Fortune 200 firm took down the whole building and asked it to up the ante on efficiency with evaporative cooling and some solar arrays. Phase 2 just delivered a couple of days ago, bringing the campus to about 100k SF. Skybox doesn’t do retail co-location, Rob says—it’s looking for another large company to take down that 2.4 MW facility. It can expand the first building by 35k SF and develop another 140k SF facility.

There's quite a bit of data center construction underway. According to JLL's recently released data center report, Houston has 155k SF (26.3 MW) of data centers underway and 425k SF (about 70 MW) planned. That might not sound like a lot, but we only have 762k SF (119 MW) of existing product, so that's a significant leap. All that new supply could push rents down slightly, according to JLL regional director Bo Bond. (Pictured here with his family, Bo co-leads JLL's data center practice.)

Join us at Bisnow’s Houston Data Center event Nov. 4, starting at 7am at 1301 Fannin. Register here.