How Two Companies Are Working To Bridge The U.S. Data Center Gap

There are close to 3 million data centers in the U.S., a figure that may seem staggering. But to the well-versed in the data center market, that’s not nearly enough. 

The coronavirus pandemic has driven the ever-growing demand for data centers as Americans move more of their day-to-day activities online. This major increase in online activity, paired with a number of burgeoning tech trends, is shining a light on the fact that while there are millions of data centers, there is still a need for more. 

Most of all, there is a pressing need for more edge data centers: facilities that are located close to the population centers they serve. These centers enable faster internet service and allow local businesses to take advantage of highly reliable, redundant facilities and cloud-based services. Edge data centers typically have a smaller footprint than the mega data centers, which create economies of scale when entering new markets.   

“More businesses are realizing the convenience of moving their workloads to multi-tenant data centers, but they aren’t located in an area where they can easily access one,” said Brad Moore, CEO of Twin Palms Capital, which recently began developing a strategy to deploy 27 edge data centers in states across the U.S.

The current data center market may be large, but it is not yet democratic. Data centers are largely concentrated in hubs like Northern Virginia and Silicon Valley. Plus, many of the largest centers — those exceeding 200K SF — are owned and operated by Amazon, Google and other tech juggernauts, which don’t lease space to other companies.

Many businesses located far from these data center hubs are interested in using their services, but are currently unable to find a facility to suit their needs. That demand is expected to drive edge data center demand. The global market for edge data centers is expected to hit nearly $13.5B by 2024, nearly tripling its $4B market in 2017.

“In many markets, the few data centers that are available fill up fast with companies purchasing 20 or 50 cabinets,” Moore said. “If you’re a business looking to use one or even just half of a cabinet, you’re out of luck.”

He added that while companies can operate their own data centers, that can be a costly and time-consuming endeavor that can take away from focusing on their core business.

To reach companies in underserved markets, Moore and his team at Twin Palms have teamed up with Involta, a hybridIT and data center service management provider, to build 20K SF edge data centers. Most of these centers will be built in markets that are currently underserved.

To begin, Twin Palms will develop edge data centers in Massachusetts, North Carolina, Washington and Tennessee. Twin Palms will be the general manager of the project, in charge of choosing the site locations, leasing, marketing, and debt and equity financing for the centers, while Involta will oversee the construction of the facilities and run the day-to-day operations.

The first facility will open in Littleton, Massachusetts, approximately 26 miles from Boston. Moore said that he’s excited to bring much-needed services to this area, which is about 15 miles from the next-closest data center.

“Businesses in the areas where we’re building have been searching access to a new, efficiently run data center with cloud and other high-tech services provided from a company like Involta,” Moore said. “Now, they can leverage hybrid IT and colocation services to expand their technology capabilities in support of growing business IT needs.”

Involta Chief Technical Officer Ken Kremer said that new technology trends, like the widespread adoption of 5G, are also driving the demand for edge data centers. Many of the applications that 5G is expected to offer users require a large amount of data to be processed at the edge of population centers in order to work efficiently.

Kremer said that 5G technology will offer users enhanced capabilities to stream high-quality videos, music and other high-bandwidth applications faster, but only if it can be delivered quickly. And quickly means the ability to access the content nearby.

“With 5G, low-latency and high bandwidth to the mobile device comes into play,” Kremer said. “To take advantage of 5G service, the proximity of the content must be closer to the mobile user to ensure the best experience possible.”

He said that edge data centers offer service providers a place to deliver content from that is closer to users. This way, movies, music and other content won’t have to be pulled from data centers across the country that can add latency and require larger expensive communications services.

Kremer added that 5G has a much larger capacity than 4G when it comes to the number of devices that can be served in a localized area. More devices can cause massive amounts of internet traffic. In order to compute and process all the data being captured, it will be critical to perform edge computing of this data for more timely and efficient results.  

“Businesses in our targeted areas have been missing out on the benefits of regional colocation data centers for too long,” Moore said. “We’re here to fix that.”

This feature was produced in collaboration between the Bisnow Branded Content Studio and Twin Palms Capital Group. Bisnow news staff was not involved in the production of this content.