Site Selection Search Presented To

Transcription

1 Site Selection Search Presented To Chad Williams Jim Kerrigan CEO & President Executive Vice President Quality Group of Companies Director, National Data Center Practice Grubb & Ellis July 22, 2009

2 Grubb & Ellis Clients Quality Tenants Financial Institutions Internet Search Engine Healthcare Law Firms Insurance Companies

3 State of Market Only five 7MW opportunities available in the U.S. to move in tomorrow. Demand currently out pacing supply by three times. Most requirements are location specific. Larger requirements tend to look at multiple markets (Google, Yahoo, Microsoft, Ebay). Only sector of real estate that will experience an increase in pricing this year.

4 1999 vs It s not Old School 1999 Primarily telecommunication companies building data centers hoping that customers will come. Companies vying for same customers. Capital readily available to build-out space. Average build-out $300/SF. Many companies spent much of their capital on bandwidth and build-out costs. Internet unknown commodity and its impact on data centers. Heavy power meant 75 watts/sf. Properties sold for pennies on the dollar in 2001.

5 1999 vs It s not Old School 2009 Every sector of business utilizes a data center (i.e. law firms, healthcare, internet, social networking, banking, etc.). Capital constraint since August Even when capital was good lenders only lent on 50% of technical space. Build-outs start at $700/sf. According to Gartner, 50% of data centers are obsolete due to power & cooling issues. Heavy power is between watts/sf. Microsoft NNN property in Chicago is selling for 7.5% CAP. Digital Realty is buying multi-tenant property in Santa Clara, CA for 10% CAP. Money is difficult to find. Limited new construction through 2010.

6 Quote from the U.S. Patent Office Everything that can be invented has been invented. -- Charles Duell, Commissioner of US Patent Office, 1899

7 Key Factors We Consider When We Do A Site Search for a Data Center 1. Power costs/kwh 2. Availability of power to certain property. 3. Reliability of power in a region. 4. Multiple substations servicing a property. 5. Fiber connectivity. 6. Does the state charge personal property taxes? 7. Impact that converting property to a data center will increase property taxes. 8. Does the state charge sales taxes? 9. Carbon tax issue at the federal level - potential to increase power costs, especially in areas that are heavily coal fired generation 10.Critical to work early with utilities - gain intelligence on preferred areas

8 What makes a good property? Power & fiber proximity Away from expressway, trains & airports Non-residential neighborhood Ceiling heights Floor loading Ample column spacing Little or no windows Large enough to expand on site Decent parking

9 How Can You Help Your Real Estate Broker/ Enterprise User Understand Your Market? Most real estate brokers/site consultants are incompetent and lazy From initial phone call when he tells you how many watts/sf vs. MW you can better ascertain credibility of broker / thereby requirement. Understand best sites/properties in your market. Provide initial estimates of how much money it will cost to bring 20MW to site. Provide contact information for state & local economic development folks. Be proactive with state/county about incentive/taxes.

10 How Can You Help Your Real Estate Broker/ Enterprise User Understand Your Market? Highlight weather related benefits (no tornados, hurricanes, etc.). Not job creation / you & your municipality will benefit from initial build-out particularly electrical workers. Doesn t burden your infrastructure. Long-term benefit from taxes on power. Time kills all transactions. The longer you take to tell me how much time it will take & how much it will cost will likely eliminate you as a prospective option.

11 One Day With Chad & Jim Picked Chad up at airport. Met with tax attorney to discuss reducing property taxes after purchase. Met with Ed Sitar and key executives at Commonwealth Edison. Met with Jerry Roper, Executive Director of Chicago Chamber of Commerce. Had lunch with prospective tenant for building. Met with local suburban key personnel (mayor, fire chief, construction department). Went to subject property Met owner & owner s agent Met utility subcontractor to discuss fiber costs Met IL DECO to discuss state incentives Drop Chad at airport.

12 You are the most important resource to us regarding your state & local municipality. We call you before we call the economic community & development department or the property. Business is not disappearing i.e. cloud or virtualization

13 Industry Organizations AFCOM 7 x 24 Uptime Data Center Dynamics Gartner Data Center Conference Tier One Not CoreNet

14 Thank You Chad Williams CEO, Chairman Quality Group of Companies J Williams Technology Centre Foster Overland Park, KS Office: cwilliams@qualitygc.com Jim Kerrigan Executive Vice President Director, National Data Center Group Grubb & Ellis Company 500 West Monroe - Suite 2800 Chicago, IL ffice: Cell: jim.kerrigan@grubb-ellis.com