The following is the report by Piyush Gandhi, National Director – Project & Development Services, JLL India
Colocation or third party-leased Data Centres are specialized projects where servers, equipment, managed space and bandwidth are available on rent to wholesale or retail customers who are in need of such customized solutions. Such types of Data Centres have become very popular among fast-growing companies which operate Internet-based businesses and are driving the growth of this industry.
Colocation Data Centres bring various inherent benefits:
· Predictable expenditure model
· Scalable capacity with quick turnaround time
· Professional management
· Dedicated infrastructure to build cloud strategies
· Better disaster recovery management.
The third-party Data Centre market is growing exponentially both internationally and in India. As per a recent report from 451 Research, the annualized revenue of the Data Centre colocation market is projected to reach $36 billion worldwide by end of 2017. At present, this market is worth around $25 billion.
If we analyse the industry, around 75 per cent of the generated revenue comes from local providers, but there is also constant consolidation happening in this sector. An approximate 40 million square feet will be added to the global Data Centre market by the end of 2017 – and interestingly, a significant part of this will come in Asia Pacific region, which presently contributes around 25 per cent of the global market.
Data Centres – The Real Estate Story
Obviously, the exponential growth of the Data Center industry offers an excellent opportunity to the real estate and construction industry. To understand this opportunity, it is important to envision the scope of a typical Data Center set-up. We are talking about a large facility which has a well-controlled and secured environment, housing high-capacity computer systems, telecommunication lines and systems with adequate redundancies to promise uninterrupted working environment.
While some companies will be able to develop their own data centers, many will follow the third-party or Colocation Data Center route. The level of back-ups and provision required for a tier 3 Data Centre setup is 99.982 per cent capacity, effectively allowing maximum 1.5768 hours downtime in a year. Tier 4 setups call for 99.995 per cent capacity, which allows maximum 0.438 hours downtime in a year. In both these categories of Data Centres, the requirements are extreme and therefore create demand for technology, products, infrastructure and people.
Data Centers are also extremely high power consumption zones, having dense arrays of computer and telecommunication systems and equally dense cabling. For this reason, Data Centers need well-planned sturdy buildings, multiple fiber lines for Internet and a large amount of equipment associated with power supply, cooling systems, fire extinguishing and building management systems.
This obviously provides a very good – though intensely focused – opportunity to developers of such buildings and infrastructure, specialised equipment suppliers as well as contractors and consultants:
· Base building developers
· HVAC contractors
· Building management system suppliers and consultants
· IT equipment and cables suppliers and consultants
· Power companies and contractors
· Design consultants
· Project management and facilities management companies
The Indian construction industry is quite capable of delivering on all these fronts, but there is a strong need for discussion forums, education and deeper understanding of technology and quality levels from facilities across the globe so that we can match and perform to global benchmarks.
The colocation or 3rd-Party Data Centres industry faces challenges on multiple fronts:
· As these are extremely power-intensive projects, getting adequate and high-quality power supply is far from easy
· The standby requirements for diesel generators involve massive fuel tanks, and these must be accompanied by all the necessary approvals. The approval process sometimes takes a long time, thereby increasing project timelines
· This is a rapidly evolving industry, and there is a constant need to keep pace with the latest technology as well as perpetually upgrading the facilities
· The requirements for Data Centre buildings, including mechanical and electrical provisions, are extremely specific and high. Developers who create facilities which can cater to this industry must be able to deliver accordingly. For example, the slab loading capacity for a typical Data Centre building can go upto 1,500 kg per square meter while most commercial buildings do not require a slab loading capacity of more than 500 kg per square meter. Floor-to-floor height requirements are also much higher than in commercial office buildings.
Obviously, premises where Data Centres can be developed are very limited. Moreover, if the building has to be developed from scratch, the overall project timelines are considerable.
JLL India’s Data Centre Expertise
As a global pioneer in real estate solutions, JLL India provides an end-to-end approach to building, running and upgrading Data Centre developments. This approach includes services for land or premises acquisition based on specific client requirements, project management during development stage and facilities management of the completed Data Centre.
As already outlined, a Data Centre project requires meticulous project planning, design coordination, management of multiple supplier and contractors. JLL’s project management team supports such requirements, along with a strong focus on processes that drive quality, safety, cost control and timely completion of the project.
· JLL India recently partnered with NTT Netmagic Solutions for their Mumbai-based Data Centre development at Chandivali. This project, covering 300,000 square feet of carpet area, was completed in record 15 months.
· JLL India’s facilities management team currently manage around 600,000 square feet of Data Centre facilities across India for leading global and Indian corporations including banks.
· Given the present growth of Internet-based businesses and e-commerce in India, the country is registering a growth rate of 25-30 per cent for 3rd-Party / Colocation Data Centres
· India leads in Asia with 105 Colocation Data Centres. Globally, there are around 3,790 Colocation Data Centres spread over 113 countries, with USA accounting for approximately 45 per cent of them.
· Some of the leading companies in 3rd Party / Colocation Data Centre in India are NTT/ Netmagic, Tata Communications, Sify, Reliance and CtrlS
· The primary co-location Data Centre hubs in India are Bangalore, Mumbai, Delhi, Chennai, Hyderabad, Pune and Jaipur. Mumbai has an advantage of being well-connected by multiple submarine cables and relatively better power supply.
· The deregulation and liberalization of telecommunications laws and policies has helped this industry and prompted rapid growth for telecommunication, Internet and Data Centres. Almost all players in Indian market have expansion plans, and significant growth is expected in this industry till 2020.
· The broad range of construction costs for a Data Center (fit-outs) would be in range of around Rs. 10,000-18,000/sq.ft. of carpet area, with a major share going to DG sets, HVAC systems, high-side and low-side electrical systems and UPSs. This is in addition to the cost of developing the base building, IT equipment and telecommunication systems.
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