The 1980s created a new property sector. High tech (or hi-tech) buildings were initially the mixed use office/industrial buildings which formed the component parts of a science park. Hi-tech described the
operations carried on within the building rather the building itself; but now the term has migrated to describe the building.
High tech – another variant of smart buildings - also describes new buildings (and whole new property types) which support technology-based platforms. These include data centres, specialised logistics such as on-line distribution hubs, click and collect stores, Amazon locker sites, co-working space designed for tech companies requiring very fast broadband, and other futures which we can imagine, such as autonomous car charging stations, drone hubs and others.
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are on the rise globally. According to Cisco, global data centre IP (internet protocol) traffic will grow threefold at a compound annual growth rate of 27 percent between 2015 and 2020. Traffic within hyperscale data centres will quintuple by 2020.
An industry tracking publication, Datacenter Knowledge, estimated that Facebook was running about 60,000 servers in 2010. Given the scale of Facebook’s completed sites, thousands of new servers will come on-line each year. This is not surprising with the explosion of applications available from the cloud, and the expectation from users for any app to process any transaction instantaneously. For a company like Facebook, building its own cloud facility is essential.
Nearly two billion photos are currently shared on Facebook services. In addition to this vast stock, 350 million photographs are uploaded onto Facebook every day. This produces a huge demand for data storage or cloud facilities. In 2010, Facebook (by no means the most data hungry of the big five tech firms) announced plans to build its own data centre in Prineville (Oregon). Since then it has completed three other data centres in Forest City (North Carolina), Altoona (Iowa), and Lulea (Sweden). To support its growth from acquired platforms such as Instagram, WhatsApp and Messenger, Facebook has started construction in two new locations in the U.S. and two more in Europe in Clonee (Ireland) and Odense (Denmark). Facebook has commissioned a new build averaging a million square feet every year in the last seven years. In SEC filings Facebook reported capital expenditures related to data centre infrastructure, network equipment and office space of about $4.5 billion in 2016, $2.5 billion in 2015, and $1.8 billion in 2014 – growth of 2.5x in three years. The company expects this expense to continue growing as its business (and its data centre footprint) expands.
Figure 4.2: The Facebook data centre at Altoona (Iowa)
http://www.datacenterknowledge.com/archives/2015/06/04/third-facebook-data-center-coming-to-iowa/
According to the Facebook Sustainability Page (sustainability.fb.com): In 2004, one million people were using
Small buildings
including Facebook, Messenger, Groups, Instagram and WhatsApp. They’re staying connected with friends and family, discovering what’s going on in the world, and expressing what matters to them. We are committed to powering connectivity with the smallest footprint possible.
Connectivity is a main pillar for such mega data centres and their locations are useless without meeting the latency (the time interval between request and response) requirements of the applications they are serving. In the last year, Facebook has announced partnerships to help lay a trans-oceanic cable from the U.S. between the East Coast and Europe and similarly from the West Coast and Asia. It is interesting that the trading routes from several centuries ago mirror the fibre optic routes of the digital age. However, the changing nature of the internet’s global information flow is challenging and taxing existing network points, so new ones must be built, sponsored by the likes of Microsoft, Alphabet and/or Facebook.
As another example, Amazon has developed its Amazon Web Services (AWS) data centres into one of the essential pillars of its business, not only serving Amazon's internal needs but also a source of external competitive advantage. These buildings will need to be connected to broadband services in order to be fit for purpose.
In response to this need, PropTech stratup WiredScore’s Wired Certification rating standard uses several metrics, including connectivity quality, infrastructure, and readiness, to rate buildings.
WiredScore provides property owners with official certification details and information about how to improve their connectivity levels. Wired Certified information is made publicly available for tenants, agents and the general public to identify commercial spaces that meet their connectivity needs.
There is a growing number of REITs and property companies specialising in data centres and other new- generation high-tech buildings.
For example, the CBRE Global Investors spin-off Digital Realty has 198 buildings in 14 countries across 5 continents. According to Wikipedia, Digital Realty held its initial public offering in November 2004. At the time, its portfolio of 24 properties consisted primarily of those contributed by a private equity fund (GI Partners Fund I) to which CalPERS provided a $500 million equity commitment to invest in technology-related real estate and technology operating businesses. In addition, CB Richard Ellis Investors, a subsidiary of CB Richard Ellis, and members of GI Partners’ management provided a commitment of $26.3 million. Digital Realty has regularly delivered outstanding returns.
Equinix has 145 data centres in 40 markets on five continents. This is an American-origin multinational company that specializes in enabling global interconnection between organizations and their employees, customers, partners, data and clouds. The company is “the leading global colocation data center provider by
market share”. Equinix was founded in 1998 to provide a neutral place where the networks forming the early
internet could exchange data traffic. It expanded to Asia-Pacific in 2002 and Europe in 2007. The company later began operating facilities in Latin America in 2011 and in the Middle East in 2012. Its purchase of TelecityGroup in early 2016 established the company as the largest colocation provider in Europe. In December 2016, Equinix
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announced that it had agreed to purchase 29 Verizon data centres in a move to expand its presence across the U.S. and Latin America. The deal, expected to close in mid-2017, would bring Equinix’s data centre count to 179 facilities in 44 markets.