By WALLACE IMMEN
Special to The Globe and Mail
Tuesday, June 5, 2018
At the dawn of the computer era, mainframes required entire chilled rooms to house them. Today, with miniaturization of equipment, servers the size of suitcases have more capacity than any of the early behemoths. But they still require enormous rooms, because there are so many more of them.
And they still run hot, so the demand for specially built airconditioned buildings for data servers has never been greater.
Urbacon Data Centre Solutions Inc. is building an entire industrial park in suburban Toronto dedicated to data storage. The Barker Business Park Digital Campus in Richmond Hill, Ont., (near the intersection of Major Mackenzie Drive and Highway 404) will have a cluster of warehouse-like buildings ranging from 100,000 to 150,000 square feet. The only tenants will be servers and the tech staff to maintain them.
The first of the warehouse-like buildings, Data Centre One, was already 50-per-cent occupied by a tenant when it opened in mid-2017. The second is under construction, and ultimately there will be as many as five.
With another of its data centres opening in Montreal, Urbacon has now formed a joint venture with Summit Industrial Income REIT to develop, own or operate data centres across Canada.
"This is a Canadian example of what's happening on a global scale," says Peter Russell, vicepresident of properties and development management for Urbacon in Toronto. "The global demand for data storage and processing has grown exponentially over the past few years, driven by trends like the increase in mobile devices, the internet of things, cloud services and the rise of digital photography and social media."
The scale of growth is nothing short of phenomenal. Market analyst International Data Corp.
forecasts that global data will grow tenfold between 2016 and 2025.
To build a data centre isn't as easy as some other forms of development. For security they should be stand-alone facilities not shared with other office users.
The site also needs to be secure from collateral risks, such as a nearby chemical plant or rail yard, where an accident could restrict access or the potential for seismic activity or flooding, Mr. Russell says.
Importantly, a data centre needs access to plenty of reliable, affordable power. "We can house up to 2,000 racks and that equates to as many as 80,000 servers and the power requirement is from 15 to 20 megawatts. A megawatt is often defined as the power needs for about 1,000 homes, so that's the equivalent of power for a small city," says Kevin Johnston, vice-president of data centre solutions for Urbacon.
Redundant power backup is also essential to keep things online no matter what. "Not only do we have generators to back up the hydro utility, we have two generators to back up ourselves. Then we have banks of batteries, with extra battery banks to back them up.
Each server has two power connections from separate sources, so if power is lost from one source, the other keeps the server going."
And then there's cooling. A data centre consists of rows of racks filled with high-density servers about five centimetres high that run hot. "If you think a stove in your home gets hot, these racks are consuming two to six times that amount of power and produce that much more heat. So in one little rack, you've got the equivalent of two to three electric ovens running at full temperature all the time," Mr. Johnston says.
Canada -- and Quebec, in particular -- has a competitive advantage in the global market for data storage because of the abundance and relative affordability electric power, Mr. Russell notes.
"Canada also may have natural advantage just because about 95 per cent of the year we can bring in cool air from outside to use in cooling."
But it's not a case of opening the windows, though. Outside air is directed through a mechanical system to cool the inside air because "you wouldn't want to let in dust and bugs to the server rooms themselves," he says.
A cooler climate isn't necessarily essential, though. Mr. Russell points out that Dallas, which is better known for searing heat than cold, is one of the larger data centre hubs in the United States.
Bigger factors in location are proximity to high-tech markets and good fibre-optic data networks.
Expertise is essential, because there are record numbers of data centres being acquired through mergers and acquisitions. Data from U.S.-based Synergy Research Group shows the total value of data centre-oriented merger and acquisition deals that closed in 2017 reached US$20-billion, far surpassing the total for 2015 and 2016 combined. In 2018, there are also four additional major deals that have been agreed but not yet closed, with a total value of more than US$2.6-billion.
A lot of big real estate investment trusts are seeing the attractiveness of the industry, but lack of industry knowledge in data centre operations can be a barrier to market entry, Mr. Russell says.
Urbacon has several business models for data centre tenants. In the simplest, the company builds the facility with primary power and backup power generation and the leaseholder sets up its cooling solutions, power and racks. The next model is wholesale co-location where Urbacon provides the electrical and cooling service and the tenants put in their racks of equipment. Urbacon will also design and build a facility to suit the specific needs of a large-scale tenant.
As mechanical as they may sound, data centres are not necessarily dark boxes. "Theoretically you could build one of these that is entirely windowless and just held backup equipment, but in reality there are a lot of technicians and engineers going in for operations and service," Mr. Russell says. So the buildings typically feature a glass-enclosed front of house with suites that have full internet access and the amenities computer engineers appreciate, like vending machines, television -- maybe even a foosball table.
2.6% Biggest one-week gainer among REITS: Agellan Commercial
2.9% Biggest one-week gainer among real estate operating companies: Genesis Land Development
5.3% Biggest one-week decliner among REITs: InterRent
4.4% Biggest one-week decliner among real estate operating companies: Colliers International CIBC
Urbacon's Barker Business Park Digital Campus in Richmond Hill , Ont., opened in 2017 with the first of what eventually could be five data storage buildings. The DC1, above, was 50-per-cent occupied before opening.