| | April - 20189CIOReviewbenefits from the lowest cost of power of any of the major data center markets, it's location in the Central US and substantial fiber and communications infrastructure.Chicago is really two markets--downtown and the western suburbs. Both of these markets in Chicago have seen major investment by the major colocation companies, along with significant demand. Much of the demand is local in nature, but there's also demand coming out of the midwest and east coast markets interested in setting up primary or backup facilities.The biggest data center market in the world is Northern Virginia. It is home to all major colocation providers. They have facilities, some with large campuses of 50-plus acres with multiple buildings. Northern VA demand comes from all over the world and is driven by companies that have a need for colocation space on the east coast. This market has a lot of connectivity with almost all the major fiber carriers built out in the market, low-cost power with a robust power infrastructure and the largest choice of colocation providers of any market in the world.Mergers and acquisitions among the colocation providers are very active. The two mergers of Digital Realty Trust purchasing DuPont Fabros and ViaWest-Peak 10 combining were really significant in the industry. Something to keep an eye on is the activity of the larger and medium-size players who have been acquiring local operators that have facilities in one to three markets. Additionally, many of the non-publicly traded REITs are becoming quite large by using this practice and acquiring these local and regional providers. As more of these privately held colocation companies continue to go out and buy smaller operators, they could be poised to go public with an IPO in the future.From a technology standpoint, the increase in the speed of the servers installed in data centers has changed how data centers have been constructed over the last ten years. Moore's Law says that the speed of computing doubles every 18 months. This means that these faster microchips or servers are pulling down exponentially more power to operate. These microchips and their servers are also generating an exponentially greater amount of heat. What that means for the data center business is that the investment in power and cooling infrastructure, continues to climb to power these servers and to cool the environment. This increase in computing power also means that more servers can be installed in the racks populating the data center floor. This creates a denser power environment that colocation operators have to design into their facilities. The typical colocation facility ten years ago was designed to accommodate a power density of 50 watts per foot. Modern colocation facilities are being designed at 150 watts per square foot with the ability to provide areas that can offer 250 to 300 watts per square foot. This denser power and cooling environment are needed to satisfy the requirements of the Fortune 1000, cloud providers and internet-based companies but it comes at a steep price as more infrastructure is needed to operate these facilities.Consider this ­ 75 percent of the global data center activity happens here in the US. We're seeing the data center requirements of US companies growing and taking down more colocation and data center space in the US. We're also seeing a lot of companies from Asia and Europe establishing footprints and investing in US providers and product. Facilities being built today are state-of-the-art, Tier 3 facilities with at least N+1 redundancy, providing the user a lot of flexibility in meeting their data center strategy. The colocation industry is one of the fastest growing markets in both real estate and technology. Billions of dollars are being invested in this industry by institutional investors, private equity firms and other large sources of capital to increase the supply of colocation space and open up new markets for the colocation industry. As the data center requirements of Fortune 1000, cloud providers and internet-based businesses continue to increase, colocation providers are well positioned to offer the market state of the art facilities and services to satisfy the complex data requirements of business today. In the major data center markets, activity remains strong, each in their own way
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