Total Cost of Ownership Analysis
for Data Center Projects
Presented to:
Critical Facilities Round Table
January 13, 2006
Presented by:
Jerry Inguagiato
Sr. Vice President
408.453.7462
Shap Roder
Vice President
415.772.0236
Table of Contents
1. Introduction
2. Historical Data Center Market Trends
3. Lease / Purchase / Colocation Options
4. Comparison
Jerry Inguagiato & Shap Roder
Jerry Inguagiato Shap Roder
Sr. Vice President Vice President
jerry.ing@cbre.com shap.roder@cbre.com
408.453.7462 415.772.0236
Represented 158 Lease/Sale transactions Represented 98 Lease/Sale transactions
4,369,177 square feet of transactions 2,544,385 square feet of transactions
Over $800,000,000 in consideration Over $100,000,000 in consideration
10 years of commercial real estate experience 8 years of commercial real estate experience
Experience Map
Technology Practices Group and CB Richard Ellis
Technology ¾European TPG was formed in 1994. US arm was later formed in 2000
Practices Group and was originally called Intellisite.
¾A global operating unit of CBRE professionals specializing in delivering
solutions to companies at the crossroads of technology,
telecommunications, and real estate.
¾150 members worldwide in more than 250 global offices.
¾Principal aims are to represent the technology business across CBRE’s
service lines and to offer technical real estate services across industry
sectors, with particular focus on data centers.
CB Richard Ellis ¾Dating back more than 200 years, CBRE is the world’s largest provider of
diversified commercial real estate services.
¾17,000 employees
¾Offices more than 300 markets across 50 countries worldwide.
Historical Data Center
Market Trends
Historical Statistics - 2006
Gross Absorption Comparison
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
Market Statistics
Available Combined
Available Industrial Office
Raised Floor Industrial &
City Raised Vacancy Vacancy
as % of Office Inventory
Floor 2Q’05 2Q’05
Inventory (Million SF)
Atlanta 60,000 0.00011 551.3 15.60% 21.60%
Dallas 199,593 0.00025 810.7 10.10% 21.41%
Denver 213,105 0.00065 326.1 8.70% 17.30%
Northern
384,000 0.00041 938.3 6.80% 14.40%
New Jersey
Phoenix 138,000 0.00048 286.5 7.21% 14.50%
Silicon
221,635 0.00071 312.9 10.40% 16.20%
Valley
Silicon Valley Market Overview
Area Silicon Valley*
No.
Building Size (SF) Year
Direct Available
Sublease Available
Available SF
Vacancy
Available %
Direct Vacant SF
Direct Vacant %
Sublease Vacant SF
Lease Rates
Sublease Vacant %
Total Vacant SF
Totally Vacancy %
Under Construction Absorption
Planned
Low Rent
High Rent
Construction
(Silicon Valley* is defined as Palo Alto, Mt. View, Sunnyvale, Santa Clara, Cupertino,
Saratoga, Los Gatos, Campbell, San Jose, Milpitas, Fremont and Newark.)
Tenant Demand
Date Square Feet
6/1/00 5,190,000
6/1/01 1,167,000
6/1/02 225,000
10/2/02 85,000
1/13/06 440,000
Inflationary Drivers
Barriers to Entry
Supply Side Reduced
Government Legislature
Market Pressures
Legacy Facilities / Antiquated Facilities
Trends
Absorption – Less Supply
¾ Users - Organic
¾ Reemerge of Colo Operators
1st Shell Deal Done in +5 years
Balance Power Shift to Landlord
4 Year Window Starting to Shut on
Opportunity to Leverage Existing
Infrastructure
Large Deal Ownership
¾ 100% Ownership
¾ Low Cost of Funds
¾ Fed & SEC Compliance
Forecast
Higher Lease and Purchase Rates
More Green Field
More Competition
On Up Swing of Curve
More Inflationary Factors Pushing Up Cost
Quote
"We are almost full now," says Jackie Fitzpatrick, senior
director of sales for Carlyle Realty Group West, which
leases the 16-story MAE West building in downtown San
Jose that is a mix of data center and office space. "I'm
definitely hoping that my boss will buy me another data
center... or I'm going to have to refer (new customers) to
other people."
Data centers are 'in' -- again
Andrew F. Hamm
From the October 21, 2005 print edition
Lease / Purchase / Colocation Options
Building Profiles
Available Data Center Properties
3080 Raymond 2600 Napa Valley
St. 1100 Space Park Dr. 39800 Eureka Dr. Corporate Dr.
Address: Santa Clara Santa Clara Newark Napa
1 Total SF 25,000 150,000 106,690 157,500
2 Available SF 25,000 25,000 106,690
3 Technical Area 17,600 Shell 72,260 120,000
4 Raised Floor (Y/N) N N Y Y
5 Vacancy Rate 100% 17% 100% 100%
3,200 amps
6 Primary Power 85 WSF 2-50kV Feeds 10 MW
480 volts
7 Redundancy N+1 N+1 2-N+1 N
AC- 1,000 KVA
8 UPS BTS Yes 3,000 kW
DC- 2,400 amps
9 Generators 2 MW None 6-13.2 KVA 4,500 kW
10 Seismic SIF= 1.25 SIF=1.5 SIF= 1.5 SIF= 1.25
11 Cooling 20 CRAC Units BTS 2,184 Tons 572 Tons
12 Tenant(s) Colo.com AT&T, Tyco MCI Citigroup / Apple
13 Lease/Sale Lease Lease Sale Sale
Colocation Operators
Pricing Variables
Pricing Variables
1. Rent (Rack vs. Square Foot)
2. Electric (Connected Amp vs. Separately Metered)
3. Cooling (1/2 Electric Costs)
4. Environment / Services (Racks, Hosting)
Colocation Requirement Criteria
LEASE TERM 5 Years
AREA 5,000 square-feet
SPACE Space shall be improved with access/raised
IMPROVEMENTS floor, electrical branch circuits, and cooling.
Space shall be protected with a building-wide
security system.
RACKING 150 Cabinets1
ELECTRICAL Two 208VAC 30A circuits per Cabinet
MECHANICAL HEAT REJECTION 3,000W per Cabinet
TECHNICAL No technical services
SERVICES
NETWORK One 1Gbit WAN Circuit to San Francisco
CONNECTIONS One 1Gbit WAN Circuit to Sacramento
1 – Cabinets will be Tenant-provided. “Cabinet” includes footprint for floor-mounted equipment (such as storage equipment).
Comparison
Data Center Construction Costs
Redundancy Mechanical
Raised Floor (SF) Racks Support Space Load
Configuration Redundancy
0.5mW IT Load
6,000 180 +/- 1,600 1.2 mW Total Load 2N UPS N+1
(83.33 w/SF)
5.6mW IT Load "6 makes 5" with
40,000 860 +/- 13,000 9.0mW Total Load Static Switched N+1
(140 w/SF) PDU UPS
1.6mW IT Load
12,000 - 3,600 2.8 mW Total Load N+1 N+20%
(133 w/SF)
Price Comparison Build vs. Outsourcing
Build 200 Sq Ft Outsource
Startup Expenses Facility Solution
1 # of Cabinets 12 12
2 # of T-1's 12 12
Design Engineering $50 per sq ft $ 10,000 $ -
Permit & fees $ 1,500
HVAC 3 $1500/ton $ 9,000 $ -
Power
Power Distribution 4 $41 per sq ft $ 8,200 $ -
UPS 4 $28 per sq ft $ 5,600 $ -
Generator & Bus 4 $55 per sq ft $ 11,000 $ -
Fire Suppression 5 $20 per sq ft $ 4,000 $ -
Pre-action @ sprinklers 13 $7,500 min $ 7,500
Security Systems $3 per sq ft $ 600 $ -
Environmental monitoring $5 per sq ft $ 1,000 $ -
Other Construction 11 $45 per sq. ft. $ 9,000
Builder overhead & fee 15% $ 10,110
Network Termination Equip 6 $1,000 per T1 $ 12,000 $ -
Network Install $600 per T1 $ 7,200 $ -
Network Install - Outsourced $460 per T1 $ 5,520
Cabinets $1500 per cab $ 18,000 $ 18,000
Total $ 114,710 $ 23,520
Startup Savings $ 91,190
Price Comparison Build vs. Outsourcing
Recurring (per year)
Rent $20 per sq ft $ 4,000 $ -
Power 12 $0.007 per KWH $ 10,484
Power - Outsourced 7 $5 per Amp/mo $ 9,360
Network Access 8 $400 per T1/mo $ 57,600
Network Access Outsourced 9 $320 per T1/mo $ 46,080
Staff/Labor 10 $37,500/person/yr $ 37,500 $ -
Tech Support $5,000 per year $ 5,000
Cost of Capital 10% per year $ 11,471 $ -
Depreciation 15 yr straight-line $ 4,720 $ -
Colocation Rent $50/sf/mo $ 120,000
Total $ 130,775 $ 175,440
Yearly Savings $ (44,665)
Total 1st Year Savings $ 46,525
Summary
More Inflation to Push Rents Up
Build Out Inventory Going Away
Burden Pushed to Tenant
Lease Rates - $1.25-$3.00 NNN
Purchase Rates - $190-$515/psf
