Atlanta Data Center Market Shows Promising Growth Opportunities

Many cities are geographically challenged in the way they can grow. A lake or river prevents 360-degree growth. Chicago, for instance, can’t expand eastward because of Lake Michigan. New York City (Manhattan) is an island. Los Angeles is bordered on the west and southwest by the Pacific Ocean. Atlanta, however, has no such restrictions. As Atlanta expands in all directions, so too does the demand for data center space.

Prior to 2007, many small colocation providers dotted the Atlanta market. Telcos like Sprint, AT&T, Verizon & Level 3 all had a presence in the Atlanta area. Things changed when QTS bought the EDeltaCom facility in Suwanee and the “Metro” Distribution Center in West Atlanta. Literally overnight, QTS became the Atlanta giant for almost a decade. Smaller players either folded up shop or merged with larger companies. Sprint sold its data center business to VeriCenter. VeriCenter was then acquired by SunGard. Savvis sold to CenturyLink. IBM sold some of its data center assets to AT&T.

Suddenly, new players began to pop-up around Atlanta. Peak 10 (now Flexential) opened facilities in Norcross and Alpharetta. T5 Data Centers built its first facility in Alpharetta. Equinix rehabbed facilities in downtown at 180 Peachtree Street and purchased TelX at 56 Marietta Street and later purchased Verizon facilities. CenturyLink sold its data center business to Cyxtera. ColoATL has been a mainstay in 55 Marietta street for years. DataSite has had a home in east Cobb for well over a decade. Ascent purchased the RIM data center in Alpharetta. Internap moved much of its operations to the Lincoln Rackhouse facility near Perimeter Mall. Server Farm bought a facility in Suwanee. ZColo purchased the facility on White Street in southwest Atlanta. DataBank began construction of a 2 MW facility in Midtown. Digital & Carter Validus took over a major portion of the building at 250 Williams Street in downtown.

And that brings us to 2018. We now see “submarkets” in the Atlanta area. Suwanee/Norcross has become a submarket area. Downtown/West Atlanta is another submarket. Alpharetta has become a technology hub and thus a magnet for data centers. Facebook announced its purchase of 416 acres in Covington, 30 minutes east of Atlanta on I-20 for its data center campus. Digital Realty, Cyxtera & Google made up another submarket in Lithia Springs. They are going to now be joined by market newcomers Switch & CyrusOne. They’ll also be joined by Atlanta-based T5 Data Centers, with its 2nd Atlanta area facility.

The combination of Switch, CyrusOne & T5 will have almost as much capacity as that of all the other data centers combined. At the end of 2017, Data Center Hawk estimated Atlanta’s total data center capacity to be just under 200 MW. Switch’s estimated capacity will be 110 MW. CyrusOne’s data center campus is said to total 50 MW. T5’s entry into the Douglas County data center area will be for another 20 MW. With 180 MW of fresh, new capacity in the Atlanta area, both Hyperscale & Hybrid IT organizations will have plenty of options. Not only do companies now have a choice of who they want to provide data center colocation services, but they can choose which submarket best fits the needs of their employees.

What is causing all this interest in Atlanta? In my opinion, the interest is due to a variety of factors. 1) Hyperscale companies realize they need to get closer to population centers, not just Silicon Valley or Northern VA. Atlanta is the technology hub and population mecca of the Southeastern US. 2) Technology talent is plentiful in Metro Atlanta. With Georgia Tech, Georgia State, Kennesaw State and UGA, Atlanta can supply companies with the right talent to fit their needs. 3) Facebook’s data center campus announcement validated Atlanta as the next major market for major cloud-based companies. Facebook joins Google & Twitter as major hyperscale companies with an Atlanta area presence. And, 4) Recent announcements by Fortune 500 companies moving their headquarters here are putting pressure on Atlanta data center operators to provide sufficient capacity for future growth.

Bottom line: Atlanta’s growth from all sides is mirrored by data center growth in all the Atlanta submarkets. I believe Atlanta is ready for the transformation.

Bob Kramlich is the Vice-President of Sales for T5 in Atlanta. He can be reached at bkramlich@t5datacenters.com.